1986 (8) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Inspecting Assistant Commissioner to impose penalty u/s 271(1)(c) after the omission of sub-section (2) of section 274 by the Taxation Laws (Amendment) Act, 1975.
2. Determination of the relevant date for jurisdiction - whether it is the date of reference by the Income-tax Officer or the date of initiation of penalty proceedings.
3. The vested right to a forum and whether procedural laws apply retrospectively.

Summary:

Issue 1: Jurisdiction of the Inspecting Assistant Commissioner
The primary issue was whether the Tribunal was correct in holding that the penalty of Rs. 58,000 imposed by the Inspecting Assistant Commissioner u/s 271(1)(c) on February 25, 1978, was without jurisdiction due to the omission of sub-section (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, effective from April 1, 1976. The Tribunal had based its decision on the view that the Inspecting Assistant Commissioner lacked jurisdiction post-amendment. However, the High Court concluded that the Inspecting Assistant Commissioner would be deemed to have been seized of the matter once the Income-tax Officer recorded the finding of concealed income exceeding Rs. 25,000, thus having jurisdiction on March 10, 1976, before the amendment took effect.

Issue 2: Relevant Date for Jurisdiction
The court examined whether the relevant date for determining jurisdiction was the date of reference by the Income-tax Officer or the date of initiation of penalty proceedings. The court clarified that the Inspecting Assistant Commissioner would be deemed to have jurisdiction from the moment the Income-tax Officer recorded the finding of concealed income, making the actual reference a ministerial act. Therefore, the relevant date was when the Income-tax Officer completed the assessment and found concealed income exceeding Rs. 25,000, which in this case was March 10, 1976.

Issue 3: Vested Right to a Forum
The court addressed whether the right to a specific forum is a vested right and whether procedural laws apply retrospectively. It was held that while procedural laws can have retrospective effect, they do not affect the substantive rights or the forum unless explicitly stated. The court referred to the Supreme Court's decision in Jose Da Costa v. Bascora Sadashiva Sinai Narcornin, emphasizing that the right to get a decision from the tribunal with jurisdiction before the amendment remains unless the enactment expressly or impliedly takes away that right. Hence, the Inspecting Assistant Commissioner retained jurisdiction despite the amendment.

Conclusion:
The High Court answered the referred question in the negative, against the assessee and in favor of the Revenue, holding that the Inspecting Assistant Commissioner had valid jurisdiction to impose the penalty as he was seized of the matter before the amendment took effect.