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TMI Blog1987 (8) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and on disclosure of certain materials showing concealment of income, the Income-tax Officer issued notice under section 148 ofthe Act. Thereafter, the assessee filed a return disclosing an income of Rs. 3,13,350 made up of Rs. 2,49,250 originally assessed under the head" Business " and a further sum of Rs. 64,100 under the head " Other sources ". The Income-tax Officer brought this sum of Rs. 64,100 to tax in the revised assessment made on October 21, 1975, and referred the matter to the Inspecting Assistant Commissioner under section 274(2) ofthe Act for imposition of penalty. The Inspecting Assistant Commissioner by order dated October 20, 1977, imposed penalty of Rs. 64,150.The assessee appealed to the Tribunal questioning the jurisdiction of the Inspecting Assistant Commissioner to impose penalty after section 274(2)was omitted with effect from April 1, 1976, as per section 65 of the Taxation Laws (Amendment) Act, 1975. The Tribunal, by its order dated March 1, 1980, has set aside the order imposing penalty on the ground that the Inspecting Assistant Commissioner has no jurisdiction to impose penalty after the Taxation Laws (Amendment) Act, 1975, had come into for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 274 was substituted by the Taxation Laws(Amendment) Act, 1970, with effect from April 1, 1971, and the sub-section, after its substitution, reads " (2) Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling 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 Rs. 25,000, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have ill the powers conferred under this Chapter for the imposition of penalty." The Taxation Laws (Amendment) Act, 1975, which came into force on April 1, 1976, has by section 65 omitted sub-section (2) of section 274 ofthe Act. As already noticed, jurisdiction to impose penalty is conferred on the Income-tax Officer under section 271 (1) of the Act on his satisfaction ofthe matters specified in clauses (a), (b) or (c) during the course of the assessment proceedings. Section 274(2) as it stood prior to its deletion by the Taxation Laws (Amendment) Act, 1975, had conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITR No. 42 of 1976(CIT v. Varkey Chacko [1982] 136 ITR 733 (Ker)), wherein after are view of the case law on the subject, this court has held that the competence of the authority to exercise the power under section 271(1)(c) is to be determined with reference to the law in force on the date of initiation of the penalty proceedings. The Tribunal was not, therefore, right in its view that the date of filing of the return is the material date with reference to which the law relating to the matter has to be gathered.The said error committed by the Tribunal has not, however, affected the conclusion reached by the Tribunal in the present case, because on the date of initiation of the penalty proceedings, it was the Inspecting Assistant Commissioner of Income-tax who was the authority competent under section 274(2) of the Act as it then stood to exercise the power under section 271(l)(c) in relation to the assessee in this case. We, accordingly, answer the question referred in the affirmative, that is, against the assessee and in favour of the Department." Varkey Chacko's case [1982] 136 ITR 733 (Ker) was concerned with the question as to whether the liability for penalty is as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department carried the matter in appeal before the Tribunal. The Tribunal confirmed the order of the Appellate Assistant Commissioner holding that the law governing imposition of penalty for concealment of income is the law that was in force on the date on which the return in which the concealment has been made was furnished before the Income-tax Officer and the amendment made by the Taxation Laws (Amendment) Act, 1970, empowering the Income-tax Officer to levy penalty in cases where the minimum penalty imposable is less than Rs. 25,000 had no application because the amendment had not been made retrospective. Answering the question referred to it in favour of the Department, the Division Bench held at page 739 : " As already indicated by us, the principle that the penal liability of a person in respect of an offence committed by him is governed by the law actually in force as on the date of the commission of the offence cannot have application in determining which authority is competent to initiate proceedings for imposition of penalty in respect of the commission of any offence or infringement under the Act. We are clearly of opinion that the competence or jurisdiction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiation of the penalty proceeding. We are supported in this view by the observations contained in CIT v. Raman industries [1980] 121 ITR 405 (P & H) and CIT v. Balabhai & Co. [1980] 122 ITR 301 (Guj). The question that arose in both those cases was whether by reason of the amendment effected in section 274(2) by Act 42 of 1970, the Inspecting Assistant Commissioner of Income-tax, before whom a penalty proceeding under section 271 (1)(c) of the Act was pending, would cease to have jurisdiction to deal with the matter by reason of the fact that the amount of income in respect of which concealment had taken place did not exceed Rs. 25,000. P. D. Desai J., speaking on behalf of the Bench of the Gujarat High Court in CIT v. Balabhai & Co.[1980] 122 ITR 301 (Guj), held that the jurisdiction of the Inspecting Assistant Commissioner to deal with a penalty proceeding was governed by the law which was in force at the time when the penalty proceedings were initiated and it remained unaffected by the subsequent change introduced in that law by the Amending Act of 1970. Endorsing the same view, Mittal J., speaking on behalf of the Division Bench of the Punjab High Court in CIT v. Raman Industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ull Bench decision in CIT v. Mohindar Lal [1987] 168 ITR 101 has affirmed the same view. The Madhya Pradesh High Court in CIT v.A. N. Tiwari [1980] 124 ITR 680, referred to above, stated at page 684: "It may be stated as a general principle that a law which brings about a change in forum does not affect pending actions unless intention to the contrary is clearly evinced. One of the modes by which such an intention is shown is by making a provision for change over of proceedings, from the court or the Tribunal where they are pending, to the court or the Tribunal which under the new law gets jurisdiction to try them." A contrary view is expressed by the Orissa High Court in CIT v.Dhadi Sahu [1976] 105 ITR 56 and in Radheshyam Agarwalla v. CIT [1978] 113 ITR 196, by the Allahabad High Court in CIT v. Om Sons [1979] 116 ITR 215, by the Karnataka High Court in R. Abdul Azeez v. CIT [1981] 128 ITR 547 and by the Gauhati High Court in Banwarilal Chowkhani v. CWT [1983] 142 ITR 264. In Purshotam Singh v. Narain Singh, AIR 1955 Raj 203, Wanchoo C.J.,on behalf of a Division Bench of the Rajasthan High Court, stated at page 206 : "If the repealing Act provides a new forum where a legal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een no question of loss of jurisdiction, but as the matter was still pending and by change of procedure the references became incompetent, the Inspecting Assistant Commissioner had no jurisdiction to complete the proceedings because he had no longer jurisdiction to deal with the matter of this type." This decision was followed in a later decision of the Orissa High Court in Radheshyam Agarwalla v. CIT [1978] 113 ITR 196. The Supreme Court in P. Mohammed Meera Lebbai v. Thirumalaya Gounder Ramaswamy Gounder, AIR 1966 SC 430, considering the effect of section 5 of the Kerala High Court Act 5 of 1959, held that no party has a vested right under the Travancore Cochin High Court Act, 1125, to have his appeal heard by a Division Bench of the High Court and when the appeal is heard and disposed of by the High Court, no right of the party is infringed merely because it was heard by a single judge and not by a Division Bench of the High Court. Considering the amendment byway of substitution of section 23(l) of the Foreign Exchange Regulation Act, 1947, by the Amendment Act 39 of 1957, the Supreme Court in Union of India v. Sukumar Pyne, AIR 1966 SC 1206, held that a person accused of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions mentioned in sub-clauses (a), (b) or (c).Section 274(2) of the Act had invested the Inspecting Assistant Commissioner with the power of the Income-tax Officer to impose penalty in cases mentioned therein. The jurisdiction of the Inspecting Assistant Commissioner under section 274(2) was only that of the Income-tax Officer under section 271 (1) of the Act. By deletion of sub-section (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, the Inspecting Assistant Commissioner is divested of the jurisdiction of the Income-tax Officer under section 271(1) of the Act and on such divestiture, the Inspecting Assistant Commissioner ceased to have jurisdiction to proceed under section 271 of the Act. After the amendment that came into force on April 1, 1976, the authorities competent to impose penalty are those mentioned in section 271 of the Act. The change of forum is a matter of procedure and the Amendment Act is retrospective in regard also to matters pending before the Inspecting Assistant Commissioner. For the aforesaid reasons, we answer the question referred in the negative, that is, against the Revenue and in favour of the assessee. The parties will suffer their respec ..... 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