TMI Blog1980 (11) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... 27, 1972, and on the same date itself the ITO initiated penalty proceedings against the assessee on the basis of a finding reached by him in the assessment order that there had been concealment of income by the assessee in respect of an amount which did not exceed Rs. 25,000. After considering the objections put forward by the assessee, the ITO by his order dated March 26, 1974, imposed a penalty of Rs. 10,000 for concealment of income. The AAC before whom the matter was carried in appeal by the assessee set aside the aforesaid order passed by the ITO on the ground that the ITO had no jurisdiction to levy the penalty since the minimum penalty imposable exceeded the sum of Rs. 1,000. In so holding, the AAC had proceeded on the basis that the jurisdiction of the ITO in relation to the proceeding for the imposition of the penalty in the instant case was governed by the provisions of sub-s. (2) of s. 274 of the Act as they stood prior to the amendment introduced therein by the T.L. (Amend.) Act, 1970. Accordingly, the AAC held that the only competent authority who could levy a penalty in the case was the IAC. The department carried the matter in appeal before the Tribunal. The Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en heard or has been given reasonable opportunity of being heard. Sub-section (2) of s. 274, which is the provision with which we are directly concerned, was amended by s. 49 of the T.L. (Amend.) Act, 1970, with effect from April 1, 1971. Prior to the said amendment the said sub-section was in the following terms: "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. " After the amendment introduced by the T. L. (Amend.) Act, 1-970, subs. (2) was in the following terms: 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 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 rupe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to furnish the return in time. Accordingly, it was held that the law as it, stood on 30th June, 1962, governed the proceedings and the provision for the imposition of minimum penalty had no application to the case. The legal position is well established that the quantum of penalty to which a person can be subjected in connection with the commission of an offence is to be determined with reference to the law governing the matter as it stood on the date of commission of the concerned offence. In the decision aforecited the Division Bench of the Madras High Court has only applied the said principle and held that the quantum of penalty to be levied in proceedings under s. 17(1)(a) of the G.T. Act, for the offence of failure to file the return within the prescribed time should necessarily be governed only by the law as it stood on the date when the assessee committed the offence, namely, 30th June, 1962, which was the last date before which the return had to be filed. The question that we are now called upon to decide in this case is altogether different. Briefly stated, the point to be considered is whether the jurisdiction and power of the ITO to levy penalty against an assessee un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but that revision petition was dismissed. Against the revisional order passed by the Addl. Commissioner the assessee filed a writ petition before the Madras High Court contending, inter alia, that the proceeding initiated by the ITO for imposition of penalty was without jurisdiction. That contention was upheld by the Division Bench of the Madras High Court. The Division Bench considered that the question was not res integra but was already covered by the decision of the same court in CGT v. C. Muthukumaraswamy Mudaliar [1975] 98 ITR 540 (Mad). Reliance was also placed by the Division Bench on the decision of the Punjab High Court in CIT v. Bhan Singh Boota Singh [1974] 95 ITR 562. What was laid down in CGT v. C. Muthukumaraswamy Mudaliar as well as in CIT v. Bhan Singh Boota Singh, was only that the quantum of penalty leviable in respect of an offence is to be determined with reference to the law prevailing on the date when the offence or infringement took place and not with reference to the State of the law as on the date when the penalty proceedings were initiated or completed. Neither of these decisions has dealt with the question of jurisdiction or competence of the officer co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is reached, the scheme of sections 274(1) and 275 of the Act of 1961, is that the order imposing penalty must be made after the completion of the assessment. The crucial date, therefore , for purposes of penalty, is the date of such completion." The words used by Parliament in the provision in sub-s. (2) of s. 274 as amended in 1970, " the amount of income (as determined by the Incometax 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 " also clearly point to the conclusion that the point of time material for determining which authority is competent to exercise the power of imposition of penalty under s. 271(i)(c) of the Act is the date of initiation of the penalty proceedings which would ordinarily be the date of completion of the assessment itself. This position is quite consistent with the principle recognised in general law that the jurisdiction of an authority or tribunal to suo motu initiate a proceeding, or to entertain a dispute or claim filed before it is governed by the relevant provision of law that is in force as on the date of initiation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If during the time, when the matter was pending before the Inspecting Assistant Commissioner the law was changed by Act 42 of 1970 with effect from April 1, 1971, and the minimum penalty for the purpose of making a reference to the Inspecting Assistant Commissioner came to be raised to Rs. 25,000, it does not mean that the jurisdiction of the Inspecting Assistant Commissioner was taken away." We are in respectful agreement with the view expressed in the aforecited rulings that the jurisdiction of the ITO/IAC to initiate proceedings for the imposition of penalty against an assessee under s. 271(1)(c) of the Act read with s. 274(2) is to be determined with reference to the provisions of law in force as on the date of initiation of such proceeedings. We are unable to accept as correct the view expressed by the Division Bench of the Madras High Court in Continental Commercial Corporation v. ITO [1975] 100 ITR 170, that it is the law which was in force on the date of filing of the return by the assessee that would govern the jurisdiction of the concerned authority to impose penalty under s. 271(1)(c) of the Act. Accordingly, we hold that the Tribunal was in error in holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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