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Jurisdiction of the Income-tax Officer to levy penalties for assessment years 1969-70 and 1970-71 under section 274(2) of the Income-tax Act, 1961. Analysis: The case involved a question of law referred by the Income-tax Appellate Tribunal regarding the jurisdiction of the Income-tax Officer (ITO) to levy penalties for the assessment years 1969-70 and 1970-71. The ITO had issued notices to the assessee for concealing income in the returns filed for those years. The ITO determined the concealed income and levied penalties equal to the amounts concealed. The assessee contended that the ITO lacked jurisdiction to levy penalties, arguing that the proper authority should have been the Income-tax Appellate Commissioner (IAC) as per section 274(2) of the Income-tax Act. However, the Tribunal held that the ITO had the authority to levy penalties based on an amendment effective from April 1, 1971, allowing the ITO to levy penalties where the concealed income did not exceed Rs. 25,000. The assessee further argued that penalties should be levied according to the law in force when the offence of concealment was committed or when the returns were filed, relying on the Supreme Court decision in Brij Mohan v. CIT. The Revenue's counsel contended that the penalties were correctly levied under the amendment effective from April 1, 1971, and that the ITO had the authority to pass the orders. The court rejected the assessee's argument that penalties should be governed by the law in force at the time of filing returns, emphasizing that the law prevailing at the time of initiating penalty proceedings determines the authority to levy penalties. The court relied on the Supreme Court decision in Brij Mohan's case to establish that the law applicable for the levy of penalties is the one in force when the offence of concealment was committed. In this case, as the penalty proceedings were initiated after April 1, 1971, the amendment empowering the ITO to levy penalties for concealed income up to Rs. 25,000 was applicable. Therefore, the court held that the ITO had the jurisdiction to levy penalties for the assessment years in question. The court cited similar views taken by other High Courts to support its decision, emphasizing that the authority to levy penalties is determined by the law in force at the time of initiating penalty proceedings. Ultimately, the court answered the question in favor of the Revenue and against the assessee, upholding the ITO's jurisdiction to levy penalties under the relevant amendment. Case Reference: - Addl. CIT v. Dr. Khaja Khutabuddinkhan [1978] 114 ITR 905 - Brij Mohan v. CIT [1979] 120 ITR 1 - CIT v. Varkey Chacko [1982] 136 ITR 733 - CIT v. Balabhai & Co. [1980] 122 ITR 301 - CIT v. Raman Industries [1980] 121 ITR 405
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