1994 (4) TMI 48 - HC - Income Tax

Summary

Issues:
Jurisdiction of Inspecting Assistant Commissioner to levy penalties after April 1, 1976.
Validity of the Tribunal's decision on the jurisdiction of the Inspecting Assistant Commissioner.
Validity of the Tribunal's decision on the merits of the case.
Compliance with the provisions of section 254/255 of the Income-tax Act.

Jurisdiction of Inspecting Assistant Commissioner:
The case involved the question of whether the Inspecting Assistant Commissioner had the jurisdiction to levy penalties after April 1, 1976. The Tribunal had held that the Inspecting Assistant Commissioner had no jurisdiction to impose penalties after the specified date due to the deletion of section 274(2) of the Income-tax Act. However, the High Court referred to a previous decision by the apex court in CIT v. Dhadi Sahu, which established that the jurisdiction of the Inspecting Assistant Commissioner was not divested by the amendment if the reference was validly made before the specified date. The High Court concluded that if the reference was made before April 1, 1976, the Inspecting Assistant Commissioner's order would not be considered without jurisdiction. Therefore, the Tribunal's decision on the jurisdiction issue was overturned.

Validity of Tribunal's Decision on Jurisdiction:
The High Court also addressed the dispute raised by the assessee's counsel regarding the Tribunal's decision on the jurisdiction issue. The counsel argued that the Tribunal's decision, which included a finding on the merits of the case, could not be sent back for reconsideration. The High Court clarified that under the provisions of section 254/255 of the Income-tax Act, a judgment must be given by both members of the Tribunal. Since one member had not provided a judgment, the High Court deemed the order not in accordance with the law. As a result, the High Court directed the matter to be sent back to the Tribunal for a fresh consideration, disregarding the previous decision on the merits.

Compliance with Provisions of Section 254/255:
The High Court emphasized the importance of compliance with the provisions of section 254/255 of the Income-tax Act. It stated that for an order to be considered a judgment by the Tribunal, it must be given by both members. Since one member had not provided a judgment in this case, the High Court deemed the order not in accordance with the law. Consequently, the High Court instructed the Tribunal to hear the appeal afresh, providing an opportunity to both parties and deciding the matter in accordance with the law.