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Issues: Jurisdiction of Income-tax Officer to impose penalty under section 274(2) of the Income-tax Act, 1961 after the amendment in 1970.
The judgment addresses the issue of whether the Income-tax Officer had the jurisdiction to impose penalties under section 274(2) of the Income-tax Act, 1961, for the assessment years 1966-67 to 1969-70, after the amendment brought about by the Taxation Laws (Amendment) Act of 1970. The case involved the assessee filing original returns before April 1, 1971, with subsequent revised returns in 1972, leading to penalty proceedings initiated in 1974 and 1975. The contention was that since the original returns were filed before the amendment date, the jurisdiction to impose penalties vested with the Inspecting Assistant Commissioner, not the Income-tax Officer post-amendment. The court held that the amendment in 1970 transferred the jurisdiction to impose penalties up to Rs. 25,000 to the Income-tax Officer from the Inspecting Assistant Commissioner, effective from April 1, 1971. Referring to the decision in CIT v. Om Sons [1979] 116 ITR 215, the court emphasized that if the Inspecting Assistant Commissioner's jurisdiction to impose penalties had been revoked by the amendment at the time of passing the penalty order, it would be without jurisdiction. Despite contrary views in other High Courts, the court was bound by its own precedent and clarified that no vested right exists for the assessee to demand a specific officer for penalty proceedings, especially after a statutory change in jurisdiction. The court distinguished the case of Brij Mohan v. CIT [1979] 120 ITR 1, highlighting it dealt with penalty quantum, not the jurisdiction of the competent officer. Ultimately, the court ruled in favor of the Department, affirming the Income-tax Officer's jurisdiction to impose penalties post-amendment. The Department was awarded costs amounting to Rs. 250.
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