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Jurisdiction of the Income Tax Officer (ITO) to levy penalty for concealment of income for assessment year 1968-69. Comprehensive Analysis: The appeal and cross objection before the Appellate Tribunal ITAT Cochin involved the imposition of a penalty for concealment of income by the ITO for the assessment year 1968-69. The AAC found concealment as a fact but held that the ITO lacked jurisdiction to levy the penalty, subsequently canceling the penalty order. The ITO appealed against this decision, while the cross objection by the assessee pertained to the fact and quantum of concealment. The Tribunal decided to focus solely on the question of law concerning the jurisdiction of the ITO, considering the AAC's decision to be robust. The relevant provision under scrutiny was sub-section (2) of section 274 of the Income Tax Act, 1961, which was amended with effect from April 1, 1971. The amendment specified that if the income amount in question exceeded Rs. 25,000, the case should be referred to the Income Tax Appellate Commissioner (IAC) for penalty imposition. As the assessment in this case was completed post the amendment, the Tribunal had to determine whether the jurisdiction was governed by the old or amended law. The Tribunal referred to a decision of the Madras High Court, which clarified that in income-tax penalty matters, the jurisdiction of the officer is determined by the law prevailing at the time the return with concealment was filed. The Tribunal rejected the argument that the law applicable should be that at the conclusion of the assessment proceedings. It emphasized that jurisdiction is a substantive, not procedural, matter, unlike laws of limitation. Therefore, in this case, the IAC should have had jurisdiction to levy the penalty, and the ITO should have referred the case to the IAC, as the penalty exceeded Rs. 1,000. Consequently, the Tribunal dismissed the appeal by the ITO, upholding the AAC's decision that the ITO lacked jurisdiction to impose the penalty. The cross objection was also dismissed, as the Tribunal did not delve into the factual aspects. In conclusion, both the appeal and cross objection were dismissed by the Tribunal.
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