1987 (7) TMI 84 - HC - Income Tax

Summary

Issues:
Jurisdiction of Inspecting Assistant Commissioner to levy penalty under section 271(1)(c) of the Income-tax Act after April 1, 1976.

Detailed Analysis:
The case involved a reference made by the Commissioner of Income-tax regarding the jurisdiction of the Inspecting Assistant Commissioner to levy penalty under section 271(1)(c) of the Income-tax Act after April 1, 1976. The assessee had filed a return declaring an income of Rs. 47,605, which was later assessed at Rs. 83,708 by the Income-tax Officer. The Tribunal reduced the income to Rs. 54,111. Subsequently, penalty proceedings were initiated against the assessee under section 271(1)(c) of the Act based on alleged concealment of income. The case was referred to the Inspecting Assistant Commissioner as the concealed income exceeded Rs. 25,000, as required by section 274(2) of the Act at that time.

However, the Act was amended by the Taxation Laws (Amendment) Act, 1975, which omitted sub-section (2) of section 274, removing the requirement for the Income-tax Officer to refer cases for penalty imposition exceeding Rs. 25,000 to the Inspecting Assistant Commissioner. The penalty in this case was levied by the Inspecting Assistant Commissioner on April 14, 1977, after the amendment came into effect on April 1, 1976. The Tribunal canceled the penalty, stating that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty after the amendment.

The issue before the court was whether the Inspecting Assistant Commissioner had the authority to levy the penalty after the amendment, even though the penalty proceedings were initiated before the amendment. The court referred to previous judgments, including CIT v. Om Sons and Ratan Deo v. CIT, which emphasized that the officer levying the penalty must have the power to do so at the time of the final order. The court held that the amendment removing the Inspecting Assistant Commissioner's jurisdiction was applicable to ongoing penalty proceedings, even if initiated before the amendment.

The court noted that there was no saving clause in the amending Act to allow the Inspecting Assistant Commissioner to continue levying penalties in cases initiated before the amendment. Therefore, the court answered the question in the affirmative, stating that the Inspecting Assistant Commissioner did not have jurisdiction to levy the penalty after the amendment. The assessee was awarded costs amounting to Rs. 200.

In conclusion, the judgment clarified the jurisdictional issue regarding the Inspecting Assistant Commissioner's authority to levy penalties under the Income-tax Act post the 1975 amendment, emphasizing that the officer must have the power to impose penalties at the time of the final order, even if the proceedings were initiated before any relevant amendments.