1984 (9) TMI 39 - HC - Income Tax

Change Of Law Jurisdiction To Impose Penalty Law Amending Procedure Law Applicable To Assessment Penalty

Summary

Issues Involved:

1. Jurisdiction of the Inspecting Assistant Commissioner (IAC) to impose penalty after the amendment of Sections 274 and 275 of the Income-tax Act, 1961.
2. Applicability of amended procedural laws to pending cases.
3. Determination of whether the IAC retained jurisdiction for penalty imposition when the concealed income was less than Rs. 25,000 after the amendment.

Issue-wise Detailed Analysis:

1. Jurisdiction of the IAC to Impose Penalty After Amendment:

The primary issue was whether the IAC retained jurisdiction to impose a penalty after the amendment of Sections 274 and 275 of the Income-tax Act, 1961. The Tribunal had held that the IAC lost jurisdiction due to the amended provisions, as the concealed income was less than Rs. 25,000. Before the amendment, the IAC had jurisdiction if the minimum penalty exceeded Rs. 1,000. However, after the amendment effective from April 1, 1971, the IAC could only assume jurisdiction if the concealed income exceeded Rs. 25,000. The Tribunal found that the IAC imposed the penalty on January 3, 1973, when the amended provisions were in force, thus deeming the penalty order invalid due to lack of jurisdiction.

2. Applicability of Amended Procedural Laws to Pending Cases:

The court examined whether the amended procedural laws applied to cases pending at the time of the amendment. The Orissa High Court in CIT v. Dhadi Sahu and the Allahabad High Court in CIT v. Om Sons held that procedural amendments apply retrospectively, affecting pending cases. They concluded that the IAC lost jurisdiction to impose penalties if the concealed income was less than Rs. 25,000 after the amendment. Conversely, the Punjab and Haryana High Court in CIT v. Raman Industries and CIT v. Sadhu Ram, among others, argued that jurisdiction is a vested right determined at the initiation of proceedings and is not affected by subsequent procedural changes unless explicitly stated by the legislature.

3. Determination of IAC's Retained Jurisdiction:

The court reviewed various judgments to determine if the IAC retained jurisdiction in cases where the concealed income was less than Rs. 25,000 after the amendment. The majority view from the High Courts of Punjab and Haryana, Andhra Pradesh, Gujarat, Madhya Pradesh, and Calcutta supported the Revenue's contention that the IAC retained jurisdiction. These courts held that jurisdiction, once vested, continues unless explicitly revoked by the legislature. They emphasized that procedural changes do not affect substantive rights unless specified. The court noted that there was no provision in the amendment indicating that the IAC's jurisdiction was revoked for pending cases.

Conclusion:

The court followed the majority view, holding that the Tribunal was incorrect in concluding that the IAC's order suffered from a legal infirmity due to the amended provisions. The court ruled that the IAC retained jurisdiction to impose the penalty, answering the question in favor of the Revenue and against the assessee. The court emphasized that procedural amendments apply to pending cases unless they affect vested rights, which was not the case here. Consequently, the penalty imposed by the IAC was deemed valid.