TMI Blog1986 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... he Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976 ? " Mr. Ashok Bhan, appearing for the petitioner, has canvassed that the order dated December 13, 1979, of the Tribunal holding that the Inspecting Assistant Commissioner had no jurisdiction to deal with the question of imposition of penalty under section 27 l(1)(c) of the Income-tax Act (hereinafter referred to as "the Act"), on the date he passed the order imposing penalty, i.e., February 25, 1978, because as a result of the Taxation Laws (Amendment) Act, 1975 (hereinafter referred to as " the Amending Act "), which took effect from April 1, 1976, the Income-tax Officer alone was competent to deal with the question of imposition of penalty and the jurisdiction of the Inspecting Assistant Commissioner envisaged under sub-section (2) of section 271 of the Act stood abolished as a result of the deletion of sub-section (2) of section 274 with effect from April 1, 1976, as a result of the Amending Act, ran counter to the Division Bench decisions of this court in CIT v. Raman Industries [1980] 121 ITR 405, CIT v. Sadhu Ram [1981] 127 ITR 517, CIT v. Mela Ram Jagdish Raj Co. [1981] 132 ITR 897 and Telu Ram Raunqi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a remedy can be pursued is the one which is described in the procedural law of the day. Mr. Gupta sought support for his above submission from Maria Christine De Souza v. Soddar Maria Zurna Pereiro Pinto, AIR 1979 SC 1352, and drew pointed attention to the following observations of their Lordships (p. 1354): "The contention that since the right of appeal had been conferred by the Portuguese Code, the forum where it could be lodged was also governed by the Portuguese Code cannot be accepted. It is no doubt well-settled that the right of appeal is a substantive right and it gets vested in a litigant no sooner the lis is commenced in the court of the first instance, and such right or any remedy in respect thereof will not be affected by any repeal of the enactment conferring such right unless the repealing enactment either expressly or by necessary implication takes away such right or remedy in respect thereof. This position has been made clear by clauses (b) and (c) of the proviso to section 4 of the Central Act XXX of 1965 which substantially corresponds to clauses (c) and (e) of section 6 of the General Clauses Act, 1897. This position has also been settled by the decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, the appropriate course available to us is to refer the reference for decision to a larger Bench. We, therefore, direct the office to place the papers of this case before the Acting Chief justice for constituting the larger Bench. JUDGMENT OF FULL BENCH S. P. GOYAL J.(14-8-1986).-The following question which has been referred by the Tribunal at the instance of the Commissioner of Income-tax, Jullundur, for the opinion of this court, pertains to the jurisdiction of the Inspecting Assistant Commissioner to decide the question of penalty and the consequent imposition of penalty of Rs. 58,000 by him, vide order dated February 25, 1978, under section 271(1)(c) of the income-tax Act, 1961 : " Whether, the Tribunal has been right in law in holding that the penalty amounting to Rs. 58,000 imposed by the Inspecting Assistant Commissioner, vide order dated February 25, 1978, under section 271(1)(c) of the Income-tax Act, in pursuance of a reference admittedly made under section 274(2) on December 23, 1976, was without jurisdiction in view of the fact that sub-section (2) of section 274 had been omitted by section 65 of the Taxation Laws (Amendment) Act, 1975 w.e.f. April 1, 1976 ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29,100 made in the assessment. The Tribunal cancelled the penalty on the preliminary legal objection that both at the time when the penalty proceedings were referred to the Inspecting Assistant Commissioner and he assumed the jurisdiction and also at the time when the order was passed, that is, on February 25, 1978, he had no valid jurisdiction in law in view of the deletion of subsection (2) of section 274 with effect from April 1, 1976. Finding that a question of law arose from the order of the Tribunal, the Commissioner of Income-tax, Jullundur, filed an application under section 256(1) of the Act, praying that the question of law as framed be referred to this court for its opinion. As earlier observed, the Tribunal agreed with the prayer made by the Commissioner and consequently referred the question which has been reproduced in the earlier part of the judgment for our decision. The matter came up for hearing before a Division Bench of this court. Mr. Ashok Bhan, senior advocate, appearing for the Revenue, had canvassed before the Bench that the order dated December 13, 1979, of the Tribunal holding that the Inspecting Assistant Commissioner had no jurisdiction to deal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 twenty-five thousand rupees, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty." The underlined words in the said section were introduced by the Taxation Laws (Amendment) Act, 1970, enforced with effect from April 1, 1971, and prior thereto, the said sub-section read as under : " 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 minimum penalty imposable exceeds a sum of rupees one thousand, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty." From a combined reading of the provisions noticed above, it is evident that the first step towards the imposition of penalty is reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r should have been satisfied in the course of assessment proceedings regarding matters mentioned in the clauses of that sub-section. It is not essential that the notice to the person proceeded against should have also been issued during the course of the assessment proceedings. Satisfaction, in the very nature of things, precedes the issue of notice and it would not be correct to equate the satisfaction of the Income-tax Officer with the actual issue of notice:" The Taxation Laws (Amendment) Act, 1970, enforced with effect from April 1, 1971, brought about very significant and material changes in the provisions of sub-section (2) of section 274 inasmuch as under the new provision, the Income-tax Officer was required to refer the case to the Inspecting Assistant Commissioner the moment he finalised the assessment and recorded a finding that the amount of income in respect of which particulars had been concealed or inaccurate particulars furnished exceeded the sum of twenty-five thousand rupees. So, under the amended provision, the Income-tax-Officer was not to initiate any penalty proceedings or issue any notice in this regard to the assessee. The case, therefore, would be deemed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the 1970 Act with effect from April 1, 1971, because prior thereto, the penalty proceedings were to be initiated in all cases by the Income-tax Officer, whether the penalty imposable was one thousand rupees and more. It was only when the Income-tax Officer, during the penalty proceedings, was of the opinion that the penalty imposable was more than Rs. 1,000 that he was required to refer the case to the Inspecting Assistant Commissioner. Obviously, according to the provision of sub-section (2) of section 274, the Inspecting Assistant Commissioner could get jurisdiction only when the Income-tax Officer recorded the order for making the reference. Actual sending of the reference even at that time was only a ministerial act to be performed by the office and the Inspecting Assistant Commissioner was deemed to have been seized of the matter when the Income-tax Officer ordered the reference to be made. After the 1970 Amendment Act, on the other hand, the Income-tax Officer is duty bound to make a reference the moment he completes the assessment and comes to the conclusion that the amount of income, particulars of which have been concealed, exceeds the sum of Rs. 25,000. He is not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first is that 'while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment' (See Delhi Cloth and General Mills Co. Ltd. v. ITC, 54 Ind App 421 ; AIR 1927 PC 242). The second is that a right of appeal being a substantive right, the institution of a suit carries with it the implication that all successive appeals available under the law then in force would be preserved to the parties to the suit throughout the rest of the career of the suit. There are two exceptions to the application of this rule, viz., (1) when by competent enactment such right of appeal is taken away expressly or impliedly with retrospective effect and (2) when the court to which appeal lay at the commencement of the suit stands abolished (See Garikapati Veeraya v. N. Subbiah Choudhry [1957] SCR 488; AIR 1957 SC 540 and Colonial Sugar Refining Co. Ltd. v. Irving [1905] AC 369)." According to this decision, the party has a ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll available. The other decisions relied upon by him were Delhi Cloth and General Mills Co. Ltd. v. ITC, AIR 1927 PC 242; Purshotam Singh v. Narain Singh, AIR 1955 Raj 203; K. Eapen Chako v. Provident Investment Company (P.) Ltd., AIR 1976 SC 2610 and Mst. Fazi v. Mohammad Bhat, AIR 1979 J K 69 [FB]. In Delhi Cloth Mills' case, AIR 1927 PC 242, no right of appeal existed to the Privy Council when the judgment was rendered by the High Court. It was held that the later amendment would not confer such a right. In K. Eapen Chako's case, AIR 1976 SC 2610, again, there was no question before the court similar to the one debated here. The general observations regarding the procedural law are well known and on their basis no support can be sought for the proposition canvassed by the assessee. In the Jammu and Kashmir High Court case, AIR 1979 J K 69; reliance has been placed on Jose Da Costa v. Bascora Sadashiva Sinai Narcorrin, AIR 1975 SC 1843, but that case does not warrant at all the conclusion which was arrived at on its basis by the learned judges. In the Rajasthan case, AIR 1955 Raj 203, succession to the jagir opened in September, 1952, and prior thereto, article VII(3) stood ..... X X X X Extracts X X X X X X X X Extracts X X X X
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