BRIJ MOHAN versus COMMISSIONER OF INCOME TAX, NEW DELHI

Citation: [1980] 1 S.C.R. 199 · Decided: 03-08-1979 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Reference answered

Judgment (excerpt)

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199 
BRIJ MOHAN 
v. 
COMMISSIONER OF INCOME TAX, NEW DELHI 
August 3, 1979 
[P. N. BHAGWATI AND R. S. PATHAK, JJ.] 
lncon1e Tax Act, 1961, Section 271 (1) (c) (iU) as a1nended -by Finance Act 
1968-Scope of. 
Section 271(1)(c)(iii) provided that where the Income Tax Officer had 
reason to believe that the assessee had concealed particulars of his income or 
furnished inaccurate particulars of such income he may impose a penalty of a 
sum in addition to any tax payable by the assesSee \Vhich shall not be less than 
twenty per cent but \Vhich shall not exceed. one and a half times the amount of 
the tax. 
The Finance Act 1968, '""hich came into effect from April 1, 
1968, 
enhanced the penalty- to a sum which shall not be less than, but which shall not 
exceed twice, the amount of income in respect of which the particulars have 
been concealed ·or inaccurate particulars have been furnished. 
The assessee filed a return of his total income for the assessment year 1964·65 
on 24th April, 1968. In the course of assessment proceedings, the Income Tax 
Officer found that the assessee had concealed the income earried from one of his 
two firms. 
Having regard to the minimum penalty which he considered was 
leviable. he referred the case to the Inspecting Assistant Commissioner. The 
Inspecting Assistant Commis~loner imposed a penalty in respect of the concealed 
income in accordance with section 271 (1) (c) (iii) as amended by the Finance Act 
1968. 
It was argued on behalf of the assessee that (i) assessment proceeding for the 
detern1ination of total incoiiit and computation of tax liability must ordinarily be 
made on the basis of the laW prevailing during the assessment year, and inasmuch 
as concealment of income is concerned with the income relevant for assessment 
during the assessment year any penalty imposed in respect of concealment of such 
income must also be governed by the law pertaining to. that assessment year, (ii) 
under s. 139 of the Act as il stood during the assessment year 1964-65, the return 
of income should have been filed by the end of September 1964 and as the return 
although filed on April 24, 1968 was accepted by the Income Tax Officer and 
·therefore should he deemed to have been filed within time i.e. by September 
30; 1964 the penalty would be governed by the section as it originally stood 
then. 
· 
HELD: I. Clause (iii) substituted in sub-section {!) of sectibn 271 of the 
Income Tax Act, 1961 by the Finance Act, 1968, governs the case. Therefore,· 
the penalty imposed on the assessee in the instant case is covered by that pro-
vision. 
[204B] 
A 
B 
c 
D 
E 
F 
G 
} 
2. The a&msment of the total income and the computation of tax liability 
is a proceeding which for that purpose, is governed by entirely different consi-
D 
derations from a proceeding for penalty imposed ior concealment of income. 
And this is so not\vithstanding that the income concealed is the income assessed 
14-4i5 SCl/79 
B 
c 
D 
200 
SUPREME COURT REPORTS 
Ll980J l S.C.R. 
to tax. In the case of the assessment of income and the determination of the 
consequent tax liability, the relevant law is the law which rules 
during the 
assessment year in respect of \\'hich the total income is assessed and the tax 
liability determined. 
The rate of tax is determined by the relevant Finance 
Act. In the case of a penalty, however, it is imposed on account of the com-
mission of a wrongful act. It is the law operating on the date on which the 
wrongful act is committed which determines the penalty. 
Where penalty 
is 
imposed for concealment of particulars of income, it is the law ruling on the 
date when the act of concealment takes place which is relevant. It is wholly 
immaterial that the income concealed was to be assessed in relation to au 
assessment year in the past. [202G-H, 203A·C] 
3. Under s. 139 of the Act, although the statute itself prescribes the date 
by which a retorn of income must be filed, power has been conferred on the 
Income Tax Officer to extend the date of furnishing the return. A return filed 
within the extended period is a good return in the sense that the Income Tax 
Officer is bound to take it into consideration. But nowhere does s. 139 declare 
that where a return is filed within the extended period it will be deemed to 
have been filed within the period originally prescribed by the statute. On the 
contrary, the section contains a proYision for payment of interest where the

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