COMMISSIONER OF INCOME-TAX VS R. SHARADAMMA
1997 P T D 396
[219 I T R 671]
[Supreme Court of India]
Present: B. P. Jeevan Reddy and Suhas C. Sen, JJ
COMMISSIONER OF INCOME-TAX
versus
Smt. R. SHARADAMMA
Civil Appeal No. 3169 of 1984, decided on 03/04/1996.
(Appeal from the judgment and order, dated August 4, 1983, of the Karnataka High Court in I.T.R.C. No. 126 of 1981).
Income-tax---
----Penalty---Concealment of income---Law applicable to assessment-- Jurisdiction to levy penalty---Penalty proceedings pending before I.A.C. on March 31, 1976---Effect of omission of subsection (2) of S.274, w.e.f. 1-4 1976---I.A.C. competent to continue with proceedings and pass appropriate orders---Indian Income Tax Act, 1961, Ss.271(1)(c) & 274---[Abdul Azeez (R.) v. CIT (1981) 128 ITR 547 (Kar.) overruled].
The general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the Court or the Tribunal where they are pending to the Court or the Tribunal which, under the new law, gets jurisdiction to try them.
Where a reference of proceedings for levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, was made to the Inspecting Assistant Commissioner under section 274(2) of the Act, in accordance with the law in force on the date of reference:
Held, accordingly, that once the Inspecting Assistant Commissioner was thus seized of the matter, he did not lose seizin thereof on account of the deletion of subsection (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. The Inspecting Assistant Commissioner did not lose the jurisdiction to continue with the proceedings pending before him on March 31, 1976. He was entitled to continue with those proceedings and pass appropriate orders according to law.
Abdul Azeez (R.) v. CIT (1981) 128 ITR 547 (Kar.) overruled.
CIT v. Dhadi Sahu (1993) 199 ITR 610 (SC) applied. lx
Manujendra Dutt v. Purnendu Prosad Roy Chowdhury AIR 1967 SC 1419 ref.
A Raghuvir, Senior Advocate (R. Satish and S.N. Terdol, Advocates with him) for Appellant.
S. Srinivasan, Advocate for Respondent.
ORDER
This appeal is preferred against the order of the Karnataka High Court answering the question referred to it under section 256(1) of the Income Tax Act, 1961, in the affirmative, i.e., in favour of the assessee and against the Revenue. The question referred to the High Court reads:
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in cancelling the penalty levied by the Inspecting Assistant Commissioner under section 271(1)(c) holding that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under section 271(1)(c) in view of changed provisions of law?"
The assessment year concerned herein is 1972-73.
The High Court followed its earlier decision in R. Abdul Azeez v CIT (1981) 128 ITR 547 and has answered the question against the Revenue In R. Abdul Azeez's case (1981) 128 ITR 547, the Karnataka High Court had taken the view that by virtue of the omission of subsection (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, the penalty proceedings pending before the Inspecting Assistant Commissioner on March 31, 1976, cannot continue before him thereafter and that he has no jurisdiction to continue those proceedings or to pass any orders therein. It has been held that any orders passed by him on or after April 1, 1976, levying penalty, are without jurisdiction. The question is whether the said view is correct. We think not. We are supported in saying so by the ratio of the decision of this Court in CIT v. Dhadi Sahu (1993) 199 ITR 610. The facts in Dhadi Sahu's case (1993) 199 ITR 610 (SC) are the following: the assessment years concerned therein were 1968-69 and 1969-70. The assessment orders were passed in respect of the said assessment years on February 28, 1970. The Income Tax officer initiated proceedings for the imposition of penalty under section 271(1)(c) of the Act and the matter was referred to the Inspecting Assistant Commissioner under section 274(2) of the Act. On the said date, section 274(2) of the Act read as follows:
"Notwithstanding anything contained in clause (iii) of subsection (1) of section 271, if in a case falling under clause (c) of that subsection, the minimum penalty impossible 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. "
Pending reference of the case before the Inspecting Assistant Commissioner, section 274(2) was amended with effect from April 1, 1971, by the Taxation Laws (Amendment) Act, 1970. The amended subsection (2) read as follows:
"Notwithstanding anything contained in clause (iii) of subsection (1) of section 271, if in a case falling under clause (c) of that subsection, 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 words underlined by us were substituted for the words "the minimum penalty impossible exceeds a sum of rupees one thousand".
On February 15, 1975, the Inspecting Assistant Commissioner passed orders imposing penalties for both the said assessment years.
The assessee filed appeals before the Tribunal contending that by virtue of the amendment effected by the Taxation Laws (Amendment) Act, 1970, the Inspecting Assistant Commissioner lost jurisdiction to proceed with the said penalty proceedings with effect from April 1, 1971, inasmuch as in the said cases, the amount of income in respect of which the particulars have been concealed, was less than rupees twenty-five thousand, within the meaning of subsection (2) of section 274 as amended in 1970, with effect from April 1, 1971. The contention was that penalty proceedings cannot continue before the Inspecting Assistant Commissioner because the essential requirement of amended subsection (2) was not satisfied. The Tribunal accepted the said plea and allowed the appeal. At the instance of the Revenue, the Tribunal stated the following question for the opinion .of the Orissa High Court under section 256(1) of the Act (at page 614 of 199 ITR):
"Whether, on the facts and circumstances of the case and on a true interpretation of section 274, as amended by the Taxation Laws (Amendment) Act, 1970, the Inspecting Assistant Commissioner to whom the case was referred prior to April 1, 1971, had jurisdiction to impose penalty?"
The High Court answered the question in favour of the assessee whereupon the matter was brought to this Court. This Court at the outset stated the general principle applicable in this behalf in the following words (at page 616 of 199 ITR):
"It may be stated at the outset that the general principle is that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings from the Court or the Tribunal where they are pending, to the Court or the Tribunal which, under the new law, gets jurisdiction to try them."
The Court then observed that once a reference was validly made to the Inspecting Assistant Commissioner he did not lose jurisdiction to deal with the matter on account of the aforesaid Amendment Act. It pointed out that the Amending Act does not contain any provision that the references validly pending before the Inspecting Assistant Commissioner should be returned without passing any final order if the amount of income in respect of which the particulars have been concealed did not exceed rupees twenty- five thousand. The said circumstance, it held, supported the inference drawn by the Court that the Inspecting Assistant Commissioner continued to have jurisdiction to impose penalty. The Court observed (at page 617 of 199 ITR):
"It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the Court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of the change of jurisdiction of the different Tribunals or forums."
This Court pointed out that the view taken by it is also the view taken by the Gujarat, Patna, Punjab and Haryana, Bombay, Calcutta and Madhya Pradesh High Courts, whereas the Allahabad and Karnataka High Courts had taken a contrary view. The Court disapproved the contrary view taken by the Allahabad and Karnataka High Courts and approved the view taken by the other High Courts.
In our opinion, the principle underlying the said decision is squarely applicable herein. In this case also, a reference was made to the Inspecting Assistant Commissioner in accordance with the law in force on the date of reference. Once the Inspecting Assistant Commissioner was thus seized ofthe matter, he did not lose seizin thereof on account of the deletion of subsection (2) of section 274. This is also the principle underlying section 6 I~ of the General Clauses Act.
We may also mention that in Dhadi Sahu's case (1993) 199 ITR 610, this Court referred, inter alia, to the earlier decision of this Court in Manujendra Dutt v. Purnendu Prosad Roy Chowdhury, AIR 1967 SC 1419, which too was a case of deletion of section 29 of the Calcutta Thika Tenancy Act, 1949, by the Amendment Act of 1953. It was held by this Court that by virtue of the said deletion, the Controller, before whom the proceeding was pending, was not deprived of the jurisdiction to try the matter pending before him on the date of coming into force of the amending Act.
We are, therefore, of the view that the Inspecting Assistant Commissioner did not lose the jurisdiction to continue with the proceedings pending before him on March 31, 1976, by virtue of the deletion of subsection (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. He was entitled to continue with those proceedings and pass appropriate orders according to law.
Accordingly, we allow this appeal and answer the question aforementioned in the negative, i.e., in favour of the Revenue and against the assessee. There shall be no order as to costs.
M. B. A./1144/FC Appeal allowed.