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TMI Blog1980 (3) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... fect from 1-6-1974), those for the assessment years 1972-73 and 1973-74 were filed in the forms which were in vogue prior to such amendment. 3. On 5-10-1974, the officers of the income-tax department raided the business premises of the assessee and found that the assessee had maintained two sets of account, one of which alone represented the true state of affairs. A statement of the assessee was recorded and he admitted the same. It was also admitted that the returns filed on 12-9-1974 had been based not on the accounts reflecting the true state of affairs, but on the other set of accounts. Subsequently, the assessee filed revised returns for the abovementioned assessment years, which were received in the office of the ITO on 21-12-1974 accompanied by a covering letter dated 20-12-1974. The income returned was Rs. 65,027 for the assessment year 1972-73, Rs. 78,113 for the assessment year 1973-74 and Rs. 92,413 for the assessment year 1974-75. Assessments were completed on 31-3-1975, after initiating proceedings for imposition of penalty for concealment, determining the income at Rs. 78,070 for the assessment year 1972-73, Rs. 1,16,121 for the assessment year 1973-74 and Rs. 1,13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention that the IAC had no jurisdiction to levy penalties was taken. Arguments were addressed by Shri K.S. Paripoornan, counsel for the appellant herein and also by Shri P.K. Radhakrishna Menon, counsel for the appellant in IT Appeal Nos. 132 and 133 (Coch.) of 1978-79, and Shri P.S. Menon, Chartered Accountant, the authorised representative for the appellant in IT Appeal No. 675 (Coch.) of 1977-78. The learned standing counsel for the Commissioner, Shri P.K. Ravindranatha Menon, addressed arguments on behalf of the department. 8. The main contention taken by the assessee in these appeals is that the IAC had no jurisdiction to levy penalty on the date he passed the impugned orders on account of the fact that section 274(2) was deleted with effect from 1-4-1976 by section 65 of the Taxation Laws (Amendment) Act, 1975. The assessee's learned counsel contended that the provision of section 274(2) was procedural law and since the same was deleted such deletion would have retrospective effect and consequently references made to the IAC by the ITO became abated. In other words, he urged that by reason of the deletion of section 274(2), the jurisdiction that had become vested in the IAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an adjudication on the question as to whether or not he was liable to be penalised for concealment of income by the IAC, an officer of larger experience than the ITO, and the deletion of section 274(2) in such circumstances would not affect such jurisdiction. He urged that the principle laid down by the Privy Council in Colonial Sugar Refining Co. Ltd. v. Irving [1905] AC 369 would be attracted. He emphasised that since the cases in question had been validly referred to the IAC by the ITO under the provisions of section 274(2), and since there is no provision made either in the Income-tax Act, 1961 or in the Taxation Laws (Amendment) Act, 1975, taking away the jurisdiction of the IAC in respect of such cases, the IAC had the power to levy penalty. 11. The question as to whether by reason of the amendments made to section 274(2) by the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971, and again by the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976, the jurisdiction, which had already become vested in the IAC by reason of certain cases having been validly referred to him by the ITO prior to such amendment was affected or not, has been considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h amendment, the above section stood as follows : " (2) Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case failing under clause (c) of that sub-section, the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of rupees twenty-five thousand the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty. " The above provision was deleted by section 65 of the Taxation Laws (Amendment) Act, 1975, with effect from 1-4-1976. But a provision was incorporated in clause (iii) of section 271(1) requiring the ITO to obtain sanction of the IAC in case where concealment exceeded Rs. 25,000. It will be seen from the above that originally the ITO had been empowered to levy penalty when the minimum did not exceed Rs. 1,000 only. Later when the quantum of penalty became income (sic) based by the reason of amendment made to section 271(1)(iii) with effect from 1-4-1968, the ITO was empow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eprived of jurisdiction by a subsequent enactment, such a right pertains to the province of procedural law and the provisions of an amending Act relating only to a change of form are, therefore, simply matters of procedure. " At page 222 of the Maxwell On The Interpretation of Statutes, 12th Edition, the following passage occurs : " . . . No person has a vested right in any course of procedure, but only the right of prosecution or defence in the manner prescribed for the time being, by or for the court in which he sues, and if an Act of Parliament alters that mode of procedure, he can only proceed according to the altered mode...." 15. In the case of V.C.K. Bus Service the question arose in the context of a claim for damages as a result of a motor accident. The motor accident occurred on 6-1-1961 in which the bus belonging to the first petitioner and the motor car belonging to the first respondent were involved. The accident resulted in personal injuries to the claimants. Section 110(1) of the Motor Vehicles Act, 1939, provided for constitution by the Government of Motor Accidents Claims Tribunals, for specified areas, for adjudicating upon claims for compensation, in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a court of law. The respondent contended that since the Act as it stood at the time of the alleged commission of the offence provided only for prosecution in a criminal court, action taken by the Director of Enforcement was without jurisdiction. That contention was rejected and the Supreme Court held that---- " . . . a person accused of the commission of an offence has no vested right to be tried by a particular court or particular procedure except insofar as there is any constitutional objection by way of discrimination or the violation of any other fundamental right is involved. " The passage from Maxwell On The Interpretation of Statutes quoted above was also approved by the Supreme Court. 17. It will be seen from the above that while such provisions of an enactment constituting the ingredients of an offence and prescribing the quantum of punishment for the commission thereof are substantive law, the provisions relating to the procedure to be adopted for the trial therefor or prescribing the authority who has to conduct the trial are procedural law. Consequently, the law as it stood on the date of filing of the returns of income would be applicable only to find out wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the General Clauses Act applicable to pending litigation. 19. In Manujendra Dutt v. Purnedu Prasad Roy Chowdhury AIR 1967 SC 1419 the landlord had filed a suit in the Court of Subordinate Judge of Alipore for ejectment and mesne profits against the tenant alleging that the tenancy had come to an end. During the pendency of the suit, the Calcutta Thika Tenancy Act, 1949 was enacted. On both parties agreeing that the defendant was a Thika tenant as defined by the said Act and that, therefore, the suit would be governed by that Act, the Court of Subordinate Judge transferred the suit to the Thika Controller under section 29 of the said Act. During the pendency of that proceeding before the Thika Controller, the West Bengal Legislature passed the Amendment Act, 1953, which came into force on 21-4-1953, which by section 8 deleted sections 28 and 29 of the Calcutta Thika Tenancy Act. The question for consideration was whether by reason of deletion of section 29, the Controller had lost jurisdiction over the proceedings which had been transferred to him earlier by the civil court. That question was answered in the negative on the ground that though the Amendment Act did not contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well-known general principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested. " It is to be noticed that in that case the Judiciary Act was passed during the pendency of an action in the court of first instance transferring the forum of appeal to an authority different from the one which had been authorised to hear appeals earlier. Their Lordships' decision recognised that, from the date of institution of the action, the suitor had a right to appeal to a superior Tribunal according to the state of the law as it stood at the time of commencement of the proceeding. This principle was held applicable even in the case of a pending suit instituted in a civil court of competent jurisdiction by the Federal Court in Venugopala v. Krishnaswamy AIR 1943 FC 24. 23(a). Except to the extent aforesaid, there can be no question of any vested right of the assessee being prejudicially or adversely affected by reason of the deletion of section 274(2). The principle in Colonial Sugar Refining as well as Venugopala proceeds on the basis of a Tribunal or court being called upon to adjudicate on a lis between parties. As far as the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deletion of section 274(2) could not be so construed as taking away the jurisdiction of the IAC even in respect of cases already referred to him. We are unable to accept the above contention. A specific provision is made in the Explanation to section 275 for excluding the period taken for giving an opportunity to the assessee to be reheard under the proviso to section 129. It is almost certain that in all the cases, the assessee would require a fresh opportunity of being heard when the ITO takes up the question of levy of penalty in cases where reference had been earlier made to the IAC. Such being the position the period required for a proper rehearing by the ITO would fall to be excluded in computing the period of limitation before the expiry of which the penalty has to be levied. Where an assessee does not want to be reheard, the extended time limit would not be available. But then there would also be no difficulty for the ITO to pass his order expeditiously on the material already on record. We are also unable to agree with the learned standing counsel that the provisions of section 129 of the Act apply only where an income-tax authority is succeeded by another income-tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an, the Andhra Pradesh High Court held that section 6(d) of the General Clauses Act applied. But, in view of the abovementioned decision of the Supreme Court, we have come to the above view. 27. It was next contended by the assessee's authorised representative, Shri L. Rangamani, Chartered Accountant, that the assessee could not be considered to have concealed any income in the return filed by him on 12-9-1974. It was contended that the assessee was really a victim in that two sets of books of account were maintained at the instance of the accountant who had been employed by the assessee. It was also stated that the assessee had simply signed the blank return forms which were later filled up by the accountant. We are totally unable to accept the above contention. It is not disputed, on the other hand it is admitted, that two sets of books of account had been maintained---one reflecting the true state of affairs, the other being faked up accounts. It is not as if the assessee was not aware of such maintenance of two sets of account. On the other hand, it was admitted by the assessee, when he was examined at the time of search, that two sets of account books had been maintained and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further stated that such forms could not be considered as invalid. In support of this contention, he placed reliance on the decision of the Madras High Court in the case of CIT v. Royal Textiles [1979] 120 ITR 506. 30. It is by no means clear whether by reason of the amendments made to the form of return, it is obligatory for the assessee to have filed the returns for the assessment years 1972-73 and 1973-74 in the amended form, since rule 12 of the Income-tax Rules, 1962, is not explicit on the point. We will, however, proceed on the assumption that the returns of income even for the earlier assessment years should have been filed only in the amended form. But even then the question remains whether the returns filed in the forms which were prevalent prior to the amendment could be considered as illegal and, therefore, as non est. The decision of the Madras High Court on this point is clear. In that case the assessee-firm filed its returns of income in Form No. 3 on 10-3-1968 disclosing income of Rs. 1,90,000. The ITO made a provisional assessment under section 141 of the Act on 20-5-1968, and the tax demanded was paid. On 20-8-1968 the ITO required the assessee to file a return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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