Income-tax---

----Penalty---Law applicable to assessment---Concealment of income- Jurisdiction to impose penalty---Effect of amendment of S.274 by Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4-76---I.A.C. had jurisdiction to impose penalty for assessment year 1973-74---Indian Income Tax Act, 1961, Ss. 271(1)(c) & 274.

For the assessment year 1973-74, penalty under section 271(1)(c) of the Income Tax Act, 1961, was imposed by the Inspecting Assistant Commissioner of Income-tax on March 28, 1978, after the amendment of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. It was contended by the assessee that the Inspecting Assistant Commissioner had no jurisdiction to impose penalty under section 271(1)(c) after April 1, 1976:

Held, that the amendment Act with effect from April 1, 1976, did not make any provision that the power and jurisdiction vested with the Inspecting Assistant Commissioner was taken away. Hence, the Inspecting Assistant Commissioner had jurisdiction to pass the order of penalty under section 271(1)(c) of the Income Tax Act, 1961, for the assessment year 1973-74.

CIT v. Dhadi Sahu (1993) 199 ITR 610 (SC) fol.

CIT v. Om Sons (1979) 116 ITR 215 (All.) ref.

Bharat Ji Agarwal for the Commissioner.

V.B. Upadhya for the Assessee.

JUDGMENT

The following question of law has been referred by the Tribunal for the opinion of this Court:

"Whether, on the facts and in the circumstances of the case and on a correct interpretation of the Taxation Laws (Amendment) Act, 1975, the Appellate Tribunal was justified in holding that the Inspecting Assistant Commissioner had no jurisdiction to pass any order of penalty under section 271(1) on or after April 1, 1976?"

The Inspecting Assistant Commissioner of Income-tax, Varanasi Range, Varanasi by his order, dated March 28, 1978, imposed a penalty of Rs.2,01,250 under section 271(1)(c) of the Income Tax Act against which the assessee preferred appeal before the Tribunal and it was contended that the provision vesting upon the Inspecting Assistant Commissioner power to impose penalty has been amended, vide the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, and, therefore, the exercise of jurisdiction by the Inspecting Assistant Commissioner on March 28, 1978, is corum non-judice inasmuch as on the day, the Inspecting Assistant Commissioner exercised his jurisdiction under section 271(1)(c) of the Act, he was not vested with this power.

The assessee submitted that the proposition of law which he has advanced, gets support from a decision .of this Court in CIT v. Om Sons (1979) 116 ITR 215. On that basis, the Tribunal reached the conclusion that the Inspecting Assistant Commissioner was not only vested with the jurisdiction initially but also must be clothed with the power to decide the matter when the final order is made. On that basis, imposition of penalty under section 271(1)(c) of the Act was set aside. This fact is not disputed that the provision of section 271(1)(c) does not come within the purview of temporary statute but is a regular statute and, therefore, in a regular statute if any amendment is made, it will always be prospective. The rule of interpretation is that the amendment of a penal provision comes into operation from the date of amendment. Applying this principle for the assessment year 1973-74, the Inspecting Assistant Commissioner was vested with the jurisdiction to exercise his powers conferred upon him under section 271(1)(c) read with section 274 of the Act irrespective of the fact that the order in question has been passed after the coming into force of the amendment taking away this right from the Inspecting Assistant Commissioner, i.e., from March 28, 1978, and the amendment incorporated taking away this jurisdiction from the Inspecting Assistant Commissioner on April 1, 1976. Thus, the fact remains that the concealment of income was found for the assessment year 1973-74 for which the Inspecting Assistant Commissioner was empowered to impose penalty.

The point in issue has been considered by the apex Court in CIT v Dhadi Sahu (1993) 199 ITR 610 where their Lordships reversing the view expressed by this Court in Om Sons' case (1979) 116 ITR 215 and other decisions of the Karnataka High Court and other High Court ruled that the amendment Act did not make any provision that the power and jurisdiction vested with the Inspecting Assistant Commissioner is taken away. This being so, the Inspecting Assistant Commissioner was empowered to pass order of penalty. Thus, our answer to the question is that the Inspecting Assistant Commissioner had jurisdiction to pass order of penalty under section 271(1)(c) for the assessment year 1973-74.

The reference is answered in the negative in favour of the Revenue.

M.B.A./1576/FCReference answered.