1975 (1) TMI 26 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer to levy penalty u/s 271(1)(c) in view of the provisions of section 274(2).
2. Applicability of the amended section 274(2) to the case.
3. Whether the petitioner can raise the question of jurisdiction for the first time in the writ petition.

Summary:

Jurisdiction of the Income-tax Officer:
The petitioner challenged the jurisdiction of the Income-tax Officer to levy a penalty u/s 271(1)(c) based on the provisions of section 274(2) as it stood prior to its amendment by Act 42 of 1970. The court noted that the relevant provision applicable was section 274(2) before its amendment, which required the Income-tax Officer to refer cases where the minimum penalty exceeded Rs. 1,000 to the Inspecting Assistant Commissioner. Since the amount involved was Rs. 4,000, the Income-tax Officer lacked jurisdiction, making the impugned orders liable to be set aside.

Applicability of the Amended Section 274(2):
The court examined whether the amended section 274(2) applied retrospectively. It concluded that the law in force at the time of the offence (i.e., when the return was filed on December 22, 1970) was applicable. The amendment effective from April 1, 1971, did not apply to the case. The court relied on precedents, including Commissioner of Gift-tax v. C. Muthukumaraswamy Mudaliar, which held that the law at the time of the offence is relevant for penalty provisions.

Raising the Question of Jurisdiction:
The revenue argued that the petitioner should not be allowed to raise the jurisdiction issue for the first time in the writ petition. The court rejected this argument, stating that jurisdiction cannot be conferred by submission and must be addressed even if not raised earlier. The court emphasized that it cannot refuse to consider jurisdictional issues under article 226 discretionarily.

Conclusion:
The writ petition was allowed, and the orders of the Income-tax Officer and the Additional Commissioner were set aside. The court directed that the matter be referred to the Inspecting Assistant Commissioner for appropriate action. The petitioner was expected to cooperate fully to complete the penalty proceedings within the prescribed period, and the petitioner was awarded costs of Rs. 250.