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TMI Blog1995 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... g that the Inspecting Assistant Commissioner has no jurisdiction to levy penalty under section 271(1)(c) in the assessee's case on March 30, 1977, by when the law had been amended divesting him of his jurisdiction and vesting it in the Income-tax Officer although the proceedings for levy of penalty were initiated and referred to the Inspecting Assistant Commissioner even before the law had been amended on April 1, 1976 ? " The assessee, Seth Purushothamdas Dwarkadas, is an individual, carrying on business in money-lending. For the assessment year 1972-73, he filed a return on May 18, 1973, admitting an income of Rs. 4,775. Before that, on April 24, 1972, the Intelligence Wing of the Income-tax Department raided the house of the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of the wife of the assessee in a sum of Rs. 18,800 and a sum of Rs. 11,400 towards seized cash. He, however, confirmed the addition made towards pro notes. The assessee preferred an appeal to the Income-tax Appellate Tribunal against the addition of Rs. 39,000 towards seized pro notes and Rs. 25,207 towards unexplained cash, sustained by the Appellate Assistant Commissioner. The Tribunal, on a consideration of the matter, deleted the addition of Rs. 25,207 being unexplained cash as not relating to the year under consideration, but sustained the addition of Rs. 39,000 being the unexplained investment in pro notes as income of the assessee. The Inspecting Assistant Commissioner, in the course of penalty proceedings, held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act was not amended and that, therefore, the Inspecting Assistant Commissioner has got jurisdiction to complete the penalty proceedings, even though the order was passed on March 30, 1977, i.e., after the amendment came into force. In support of such contention, learned counsel for the Department relied upon the decisions in CIT v. Dhadi Sahu [1993] 199 ITR 610 (SC) and Varhey Chacko v. CIT [1993] 203 ITR 885 (SC). On the other hand, learned counsel for the assessee supported the order passed by the Tribunal in cancelling the penalty on the question of jurisdiction. The fact remains that the assessment was completed. The Income-tax Officer initiated proceedings under section 271(1)(c) of the Act, as there was concealment and furnishing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty. The amending Act did not make any provision that references validly pending before the Inspecting Assistant Commissioner should be returned without any final order being passed. The previous operation of section 274(2) as it stood prior to April 1, 1971, and anything done thereunder continued to have effect under section 6(b) of the General Clauses Act, 1897, enabling the Inspecting Assistant Commissioner to pass orders imposing penalty in pending references. What was material to be seen was as to when the reference was initiated. If the reference was made before April 1, 1971, it would be governed by section 274(2) as it stood before that date and the Inspecting Assistant Commissioner would have jurisdiction to pass the order of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to point out here that the assessee has not filed any reference application against the levy of penalty on the merits. Learned counsel for the assessee submitted that inasmuch as the assessee had succeeded before the Tribunal, he is not in a position to file any reference application. However, it must be pointed out that the assessee could have preferred a cross-question in the reference application filed by the Department before the Tribunal. Admittedly, that was not done in this case. In view of the above legal position, we are unable to accede to the request made by learned counsel for the assessee to direct the Tribunal to dispose of the penalty appeal on the merits. There will be no order as to costs. - - TaxTMI - TMITax - Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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