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TMI Blog1984 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... the names of different persons in the books of accounts of the assessee. In the absence of satisfactory evidences to the sources of the credits, the ITO included this amount as unexplained income of the assessee and initiated proceedings under s. 271(1)(c) of the Act. Since the minimum penalty imposable in this case exceeded Rs. 1000, the ITO referred the matter to the IAC. Before the IAC, it was submitted on behalf of the assessee that there was no finding in the order of the assessment that the assessee had deliberately or fraudulently furnished inaccurate particulars of its income or has concealed its income. It was also submitted that the penalty proceedings being quasi-criminal in nature, it was for the Department to prove that the assessee had concealed its income or had furnished inaccurate particulars of such income. It was also submitted that the mere fact that certain explanations of the assessee were not acceptable would not be sufficient to hold that that the assessee had concealed its income. The IAC considered the submissions made before him and also considered the fact that the alleged persons in whose names the credits appeared were in the employment of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he IAC could pass an order legally on or before March 31, 1973 (wrongly noted as 30-5-72) as he did. But while doing so, the IAC should also consider the amended provision of s. 274(2), whereby he can assume jurisdiction in a case only if the concealed income exceeds Rs. 25,000. The Tribunal found that in this case, the minimum penalty was Rs. 1,785 and, therefore, the Tribunal came to the conclusion that under the amended provision of s. 274(2) of the Act, the IAC had no jurisdiction to levy the impugned penalty. According to the Tribunal, the IAC had to keep in view the amended provision of s. 274(2) also when both the provisions came into force with effect from April 1, 1971. The Tribunal, therefore, held that the order of the IAC suffered from legal infirmity and he was not justified in imposing penalty. Accordingly, the Tribunal cancelled the penalty. A copy of the order of the Appellate Tribunal has been annexed and marked as annexure B forming part of the statement of the case. question of law has been referred on these facts at the instance of the Revenue. When the argument of the case was taken up, none appeared to argue for the assessee and so ex parte argument on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act the case has to be referred to the IAC for disposal. However, after the amendment with effect from April 1, 1971, the ITO could himself impose a penalty if the amount of income, in respect of which particulars have been concealed or inaccurate particulars have been furnished, does not exceed a sum of Rs. 25,000, but if it exceeds Rs. 25,000, the ITO has to refer the case to the IAC. In the instant case before us, the question is whether once a reference has been made by the ITO prior to the amendment from the 1st of April, 1971, whether the IAC will retain jurisdiction to impose a, penalty where the concealed income is less than Rs. 25,000. Mr. B. P. Rajgarhia has been fair enough to cite decisions both against and in favour of the Revenue. It appears that in the case of CIT v. Dhadi Sahu [1976] 105 ITR 56 (Orissa), a similar point was involved. In this case, assessments were completed for the assessment years 1968-69 and 1969-70 on February 28, 1970. As a result of various additions as against the returned income of Rs. 5,940 for the assessment year 1968-69 and Rs. 7,020 for the assessment year 1969-70, the assessee was assessed on an income of Rs. 30,840 and Rs. 19,472, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " The Orissa High Court also relied on the case of James Gardner v. Edward A. Lucas [1878] 3 AC 582 at 610 (HL), where it was held that the alterations in the form of procedure are always retrospective unless there is some good reason or other why they should not be. The Orissa High Court referred to various other decisions and ultimately came to the finding that s. 274(2) of the Act related to procedure and so when the matter was pending before the IAC by change of procedure, the references became incompetent and so the IAC had no jurisdiction to complete the proceedings because he had no longer jurisdiction to deal with matters of this type. The Orissa High Court followed the decision in the case of CIT v. Dhadi Sahu [1976] 105 ITR 56 (Orissa), in the case of Bhikari Charan Panda v. IAC of LT. [1978] 112 ITR 526 (Orissa) and in the case of Radheshyam Agarwalla v. CIT [1978] 113 ITR 196 (Orissa). Thus, the Orissa High Court has taken the view that if a reference to the IAC is made prior to the amending Act of 1970 and the reference is pending before the IAC, he loses the jurisdiction to impose penalty after coming into force of the amending Act of 1970. The learned senior standi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the case of Gupta Rice Mills v. CIT[1980] 123 ITR 825 (All), which is a decision of the Allahabad High Court. In this decision, the Allahabad High Court held that where the ITO found that the concealed income was more than Rs. 25,000 and consequently referred the matter to the IAC, the fact that, after hearing the assessee, the IAC came to the conclusion that the concealed income was less than Rs. 25,000 would not affect his jurisdiction to impose the appropriate penalty and that the IAC continues to retain jurisdiction and he is obliged to impose penalty commensurate with the finding as to the quantum of concealed income. Thus, this decision is not helpful on the point which has to be decided in the present case. This decision also shows that the prescription of the period of limitation being a matter of procedure, any amendment in this regard will be retrospective in the sense that it will apply to all those matters which are pending and which had not become closed or dead on the date the amendment takes effect and the Allahabad High Court held that s. 275 of the Act was procedural and it will apply to pending proceedings. Thus, it is evident that the Orissa and Allahabad High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on various other decisions and in view of those decisions, the Punjab and Haryana High Court differed from the decisions of the Orissa and Allahabad High Courts. The Punjab and Haryana High Court followed this decision in the case of CIT v. Sadhu Ram [1981] 127 ITR 517 (P & H). In this decision, in response to a notice under s. 148 of the Act, the assessee filed a return on June 17,1968, showing an income of Rs. 7,094. The ITO, however, after necessary proceedings, assessed the income at Rs. 22,140 on February 9, 1970, and issued notice to show cause as to why penalty should not be imposed for concealment of income. He referred the matter to the IAC on February 20, 1970, for imposition of penalty because, at that time, the ITO was competent only to impose a penalty of Rs. 1,000. The assessment order was later on rectified by the ITO on April 27, 1970, so as to reduce the total income to Rs. 10,738. The IAC, after hearing the assessee, imposed a penalty of Rs. 16,000 under s. 271(1)(iii) of the Act by order dated March 4,1972 This order was challenged by the assessee by way of appeal before the Appellate Tribunal on two grounds, namely, (i) that the penalty order, having been pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows that the jurisdiction which the IAC had, under the unamended s. 274 of the Act, continued in the circumstances of the case, and, therefore, he had jurisdiction to dispose of the penalty proceeding against the assessee-firm. Mr. B. P. Rajgarhia also relied on the case of CIT v. Balabhai and Co. [1980] 122 ITR 301 (Guj) and also on the case of CIT v. Manu Engineering Works [1980] 122 ITR 306 (Guj). Both the decisions are of the Gujarat High Court and besides giving other reasonings, they have followed the decision in CIT v. Royal Motor Car Co. [1977] 107 ITR 753 (Guj). Mr. B. P. Rajgarhia also relied on the case of Addl. CIT v. Dr. Khaja Khutabuddinkhan [1978] 114 ITR 905 (AP), which is a decision of the Andhra Pradesh High Court where, after discussing various decisions, it was held that if during the time when the matter of penalty had been referred to and was pending before the IAC, the law was changed and the minimum penalty for the purpose of making a reference to the IAC was raised from Rs. 1,000 to Rs. 25,000, it does not mean that the jurisdiction of the IAC to impose penalty is taken away and that s. 6(d) of the General Clauses Act, 1897, would apply in such cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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