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Issues: Jurisdiction of Inspecting Assistant Commissioner to impose penalty under section 271(1)(c) after the amendment of Taxation Laws Act in 1975
The judgment delivered by the High Court of Madras pertained to a reference arising from an order passed by the Income-tax Appellate Tribunal regarding the jurisdiction of the Inspecting Assistant Commissioner to impose a penalty under section 271(1)(c) post the amendment of the Taxation Laws Act in 1975. The Tribunal had set aside a penalty imposed by the Inspecting Assistant Commissioner, citing lack of jurisdiction due to the amendment. The key question was whether the Inspecting Assistant Commissioner retained jurisdiction to impose the penalty after the amendment came into effect. The case involved a firm dealing in groundnut kernels and oil, which had filed a return admitting income but was found to have sold goods through another allegedly non-genuine firm. The Income-tax Officer included the income in the assessment of the main firm, leading to penalty action under section 271(1)(c) exceeding Rs. 25,000. The Inspecting Assistant Commissioner imposed a penalty, which was later deleted by the Appellate Tribunal based on jurisdictional grounds post the amendment. The High Court analyzed whether the Inspecting Assistant Commissioner retained jurisdiction despite the amendment, referencing a Supreme Court decision in CIT v. Smt. R. Sharadamma. The Supreme Court's ruling emphasized that once an authority was seized of a matter under the law in force at the time of reference, subsequent amendments did not divest it of jurisdiction. The High Court applied this principle, stating that the Inspecting Assistant Commissioner did not lose jurisdiction due to the amendment in 1975 and was entitled to continue with the proceedings and pass orders accordingly. Ultimately, the High Court answered the reference question in the negative, favoring the Department. The judgment highlighted the importance of legal principles and precedents in determining the jurisdiction of tax authorities post-amendments, ensuring continuity in proceedings and upholding the authority's power to act within the framework of the law.
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