1984 (3) TMI 23 - HC - Income Tax

Effect Of Amendment Of Limitation Provision, Jurisdiction To Impose Penalty, Limitation, Penalty

Summary

Issues:
1. Jurisdiction to impose penalty under section 271(1)(c) vested with the Inspecting Assistant Commissioner.
2. Whether the penalty order passed by the Income-tax Officer under section 271(1)(c) was barred by limitation.

Analysis:

Jurisdiction to impose penalty under section 271(1)(c):
The case involved an assessment year where the assessee's income was declared at Rs. 216 from house property, but the assessment framed the total income at Rs. 22,930, including income from commission. The Income Tax Officer (ITO) imposed a penalty of Rs. 22,712 on the assessee for concealing income, which was upheld by the Appellate Assistant Commissioner (AAC). However, the Income-tax Appellate Tribunal, Amritsar, allowed the appeal based on a Division Bench judgment. The court considered the jurisdiction issue, where the ITO initiated penalty proceedings and the question arose as to who had the authority to levy the penalty. The court referred to previous judgments emphasizing that the law applicable at the time of the ITO's decision to impose a penalty determines the jurisdiction. The Division Bench's observations highlighted that the power to impose a penalty is procedural and must adhere to the prevailing law at the initiation of penalty proceedings. The court concluded that the law in force when the ITO decides to impose a penalty governs the jurisdiction, affirming the authority's procedural nature.

Barred by Limitation:
On the issue of whether the penalty order was barred by limitation, the court referenced a previous judgment establishing that the law of limitation is procedural. Citing the case law, the court ruled in favor of the Revenue, agreeing that the law of limitation is procedural in nature. The court's decision aligned with the precedent, answering the second question in favor of the Revenue and against the assessee. Consequently, the court did not award any costs in the matter.

This judgment clarifies the principles governing the jurisdiction to impose penalties under tax laws and affirms the procedural nature of such powers. It also underscores the significance of adhering to prevailing laws at the initiation of penalty proceedings and highlights the procedural aspect of limitation laws in tax matters.