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TMI Blog1977 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was that the mistake in the books of account arose out of the entries made by the clerk who was responsible for writing the accounts. The IAC noticed that the ITO had in a very detailed manner shown the total credit purchase omitted to be incorporated in the ledger, thereby omitted in the trading account for both the assessment years. By omitting the purchases, the sales were also omitted outright. In addition, there was also clear suppression of sales amounting to Rs. 12,556 in asst. yr. 1969-70 and Rs. 33,199 in 1970-71. The assessee's contention in regard to these suppressed sales was that they may be absorbed in the larger addition made on account of omission of purchases etc. and, therefore, no separate addition was called for. The AAC had accepted this argument and deleted the additions but on further appeals, the Tribunal had reversed the AAC's finding and restored the ITO's order. The IAC, therefore, held this to be a clear case of concealment of income and held that penalty was leviable. A large number of rulings were cited before him and in a very detailed order, the IAC considered each ruling and distinguished them. The IAC has finally held that Explanation to s. 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be." He also relied on Orissa High Court ruling in CIT vs. Dhadi Sahu 105 ITR 56 (Orrisa), though he conceded that there was a contrary decision reported in Continental Commercial Corporation vs. ITO 100 ITR 170 (Mad) of the Madras High Court. The learned Departmental Representative, on the other hand contended that this being a question of jurisdiction, the amendment made in 1976 was not retrospective and relied on the instruction of the CBDT in Instruction No. 1037 dt. 1st Feb., 1977 that the IAC continued to have jurisdiction in all cases in which assessments were made before 1st April, 1976. 4. We have considered the rival contentions. It is true that all procedural laws are retrospective unless the legislature says to the contrary and procedural laws in force must be applied when a suit or proceeding comes on trial for disposal. The rulings reported in Anant Gopal Shorey vs. The State of Bombay (1958 AIR (SC) 915), Shiv Bhgawan Moti Ram Saroji vs. Onkarmal Isha Dass Ors. (AIR 1952 (Bom) 365), Purushottam Sharam Shah vs. Prabhu Bharamastutar (1968 1 MLJ 570) Bireswar Moral vs. Indu Bhushan Kundu (Air 1943 (Cal) 573), and Abdul Khader vs. State of Mysore (AIR 1951 (Mys) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ospectively unless otherwise provided in the statute' is not applicable when the statute in question affected the jurisdiction of a Court. Provisions relating to jurisdiction are more than matters of procedure. They touch a right in existence at the passing of the statute." As regards alteration of law during pendency of action, the learned author observes on page 661 that the ordinary rule is that the right of litigants are to be governed by the law in force when the action was commenced. 5. There is a mass of case laws against the contention advanced by the learned counsel for the assessee. In Manjendra Dutt vs. Purnedu Prosad Roy Chowdhury (AIR 1967 (SC) 1419), a suit for possession of land was filed in Civil Court. While the suit was pending, Thika Tenancy Act, 1949 was enacted. The defendant admittedly being a Thika Tenant, the suit was transferred under s. 29 to the Thika Controller, for disposal. While the suit was pending before the Thika Controller, amendment by Act of 1953 was passed which abolished s. 29. The Supreme Court held that the Thika Controller did not lose jurisdiction over pending proceedings when the amendment Act came into force, even though there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th it the implication that all rights of appeal then in force are preserved to the parties thereto and this right can be taken away only by express legislation: Garikapati vs. Subbaiah Chowdhry (AIR 1957 (SC) 540). In this case, since the IAC retained the power to decide the penalty proceedings which were pending before him on 1st April, 1976 in respect of which he did not lose jurisdiction to decide, on merits, and levy penalty the right of appeal is also not lost to the assessee. 8. As regard limitation, s. 275 as it stood upto 31st march, 1971 provided that no order imposing a penalty shall be passed after the expiration of two years from the date of completion of proceedings in the Court on which the proceedings for the imposition of penalty have been commenced. Indeed, if this provision was applicable to these two appeals, then the penalty order passed on 22nd Sept., 1976 would be barred by limitation, since it was passed more than two years after the assessments were made on 12th Feb., 1975. However, s. 275 was amended w.e.f. 1st April, 1971 and provided as follows: "275. Bar of limitation for imposing penalties: No order imposing a penalty under this Chapter shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a right of action which is already barred on the date of their coming into operation, nor do they have the effect of extinguishing a right of action subsisting on that date. Thus all matters which are pending on the date on which the limitation is extended, get the benefit of the extended limitation. The Orissa High court in CIT vs. Soubhagya Manjari Devi (1976 CTR (Ori) 221 : 105 ITR 82 (Ori) has held that the question of the effect of an amendment has two aspects (i) regarding the period during which a penalty can be imposed and this is wholly procedural and (ii) regarding the quantum of penalty. In regard to the procedural aspect, the law is clear that when there is any change in law pending proceedings are governed by the new law. In that case also the penalty proceedings were initiated against the assessee on 20th Oct., 1970 and the order of penalty was passed in March, 1973. The Tribunal had cancelled the order of penalty on the ground that when penalty proceedings were initiated, s. 275 laid down a period of limitation of two years for the passing of the order of penalty. The fact that s. 275 was amended on 1st April, 1971, and the period of limitation was extended was immat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gure which was higher than the figure of concealment arrived at by the ITO and since the penalty was levied of a single indivisible sum, the entire penalty should be cancelled. Alternatively, it was urged, relying on the Punjab Haryana High Court ruling in Niemla Textile Finishing Mills P. Ltd. vs. CIT (1975 CTR (P H) 10 : 97 ITR 329 (P H) and Allahabad High Court ruling in CIT vs. Dwarka Prasad Subhash Chandra that the minimum penalty cannot exceed the amount of concealment as shown in the assessment order. 10. We have considered the contentions. The ruling in Shadiram Balmukand was under the 1922 Act. The facts in that case were that the ITO had added a sum of Rs. 9,250 as undisclosed income and had started penalty proceedings for concealment of income. On appeal to the AAC, however, further cash credits were detected and the income was enhanced by adding a sum of Rs. 46,601 as income from undisclosed sources. The ITO, while passing the penalty order, levied a penalty of Rs. 10,000 by taking into account not only the cash credits which he had added in the assessment but also the amount added in appeal by the AAC. On appeal the Tribunal held that the ITO did not have any juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the penalty should or should not be imposed is again by s. 271(1) left to the domain of the aforesaid two authorities and only after that is settled, the matter as to the imposition of penalty is left to the IAC. Sec. 274(2) provides only that if the minimum penalty imposable exceeds a sum of Rs. 1,000, the ITO shall refer the case to the IAC. It does not clothe him with the power to assess which is a pre-requisite so far as s. 271(1)(c) of the Act is concerned. Since the Tribunal had held that no penalty was exigible to respect of which penalty proceedings had been started, the High Court held that the Tribunal was not right in directing that any penalty should be computed with respect to the amount of concealment found by the IAC. This ruling supports the assessee to the extent that the IAC can consider the concealment only to the extent found by the ITO and cannot arrive at any concealment by himself. In this case the enhanced figure of concealment was however arrived at not by the IAC but by the AAC. The next ruling indeed supports the assessee in this regard. The Allahabad High Court ruling in Dwarka Prasad Subhash Chandra is clearly on this point. In that case, which is un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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