1991 (5) TMI 13 - HC - Income Tax

Summary

Issues: Jurisdiction of the Inspecting Assistant Commissioner to impose penalty post-amendment in the Income-tax Act, 1961.

Analysis:
The High Court of Allahabad addressed the issue of jurisdiction of the Inspecting Assistant Commissioner to impose a penalty under section 271(1)(c) of the Income-tax Act, 1961, post an amendment introduced by the Taxation Laws (Amendment) Act, 1975. The court considered the case law precedent set by CIT v. Om Sons [1979] 116 ITR 215, which emphasized that a court or Tribunal must not only have jurisdiction initially but also be empowered to decide the matter when the final order is passed. The court held that the Inspecting Assistant Commissioner's jurisdiction to impose the penalty was taken away by the amendment in section 274(2) of the Act, rendering the order passed without jurisdiction.

The court referred to the decision in Ganesh Dass Ram Gopal v. IAC [1983] 142 ITR 101, followed by subsequent cases such as CIT v. Lal Chand Jain [1989] 180 ITR 448, to support the interpretation that the legislative intent of the amendment was to nullify the Inspecting Assistant Commissioner's power even in cases referred to him before the amendment date. The court reiterated that the Inspecting Assistant Commissioner lacked jurisdiction to pass the penalty order under section 271(1)(c) post the amendment, as in the present case where the penalty was imposed on February 15, 1977, after the amendment brought about by the Amending Act of 1975.

Consequently, the High Court upheld the decision of the Income-tax Appellate Tribunal, ruling in favor of the assessee and against the Department. The court answered the question referred in the affirmative, confirming that the Inspecting Assistant Commissioner had no jurisdiction to pass the penalty order on the date it was issued. The assessee was awarded costs amounting to Rs. 250.