VIRKEY CHACKO vs C.I.T.

The Supreme Court held that under Section 271(1)(c) and Section 274(2) of the Income Tax Act, 1961, a penalty for concealment of income can only be imposed when the assessing authority is satisfied of such concealment after an assessment order is made. The Court affirmed that the authority to initiate penalty proceedings is governed by the law in force at the time of the assessment, and since the I.T.O. had found concealment on the date of assessment, he had the authority to impose the penalty under the amended provisions. The appeal was dismissed, upholding the High Court's decision in favor of the Revenue.