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TMI Blog1985 (3) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... section 274(2) and section 275 of the Income-tax Act, 1961 ?" The relevant short facts of this case may be culled out from the statement of the case which are as follows : The assessee is a registered firm and the reference relates to the assessment year 1966-67 for which the accounting year was Dewali ending 1965. The Income-tax Officer completed the assessment on October 20, 1970, and initiated penalty proceedings as the assessee's returned income was found to be less than 80% of the assessed income and its claim of deduction of interest was found to be on bogus hundi loans. He referred the matter to the Inspecting Assistant Commissioner as the minimum penalty imposable in this case exceeded Rs. 1,000. The Inspecting Assistant Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee was not liable to penalty on merits as there was nothing to show that the assessee had committed fraud or gross or wilful neglect in returning correct income. It was next submitted that the order of the Inspecting Assistant Commissioner imposing penalty suffered from legal infirmity because the assessment was completed on October 20, 1970, whereas penalty was imposed by the Inspecting Assistant Commissioner on March 29, 1973. It was, therefore, urged that the Inspecting Assistant Commissioner had forfeited his right to impose penalty after the period of two years from the date of completion of the assessment. It was pointed out that the Inspecting Assistant Commissioner imposed the penalty as he assumed jurisdiction under the amended pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch were completed on October 20, 1970, and when section 274(2) and section 275 were amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, the penalty proceedings were pending. The crucial date, therefore, for the purpose of penalty was the date of such completion of assessment and, therefore, if section 275 had not been amended with effect from April 1, 1971, the penalty proceedings should have been completed on or before October 20, 1970. But, since amended section 275 provides a period of two years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty had been initiated, the Inspecting Assistant Commissioner assumed jurisdiction on that basis and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in view of the amended provisions of sections 274 and 275 of the Income-tax Act, 1961 ?" Thus, it is evident that the question referred in Taxation Case No. 6 of 1976 (CIT v. Ganga Dayal Sarju Prasad [1985] 155 ITR 618 (Pat)) was similar to the question referred in the present case. It is not disputed in the present case that the reference to the Inspecting Assistant Commissioner was made when the Taxation Laws (Amendment) Act, 1970, had not come into existence and that the reference was made by the Income-tax Officer when the provision was for reference to the Inspecting Assistant Commissioner when the minimum penalty leviable exceeded Rs. 1,000. This court considered the question in Taxation Case No. 6 of 1976 (CIT v. Ganga Dayal Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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