Law:

Section:

Section 274, read with section 271(1(c) of the Income-tax Act, 1961 - Penalty - Procedure for imposition of - Assessment year 1965-66 - Whether where some provisions of statute of procedure affect vested rights, these are prospective in operation unless there is an indication in statute to contra - Held yes - Whether since there was no provision in Taxation Laws (Amend.) Act, 1970, to indicate that amendment of section 274(2), whereby reference to IAC could be made only when minimum penalty exceeded Rs. 25000, was retrospective and since said section dealt with vested rights, amendment was prospective in operation - Held, yes - Whether where before amendment of section 274(2) by said Amendment Act, assessment was completed and matter was referred to IAC and minimum penalty imposed was Rs. 4,239, IAC had jurisdiction to impose penalty - Held, yes FACTS During the course of the assessment proceedings for the relevant assessment year, the assessee offered no explanation in regard to cash credits. The ITO initiated penalty proceedings under section 271(1)(c) and referred the matter to the IAC. The IAC vide order 29-3-1972, passed under section 274(2), levied a penalty of Rs. 4,239. On appeal, the assessee pleaded before the Tribunal that the penalty proceedings should have been finalized on or before 29-3-1972, the penalty order was barred by limitation. The Tribunal came to the conclusion that under section 275, as amended with effect from 1-4-1971, the IAC could legally pass an order on 29-3-1972. It, however, accepted the assessee's contention that on account of the amendment of sections 274(2) and 275 by the Taxation Laws (Amendment) Act, 1970, which came into force from 1-4-1971, the IAC could assume jurisdiction if the minimum penalty imposable exceeded Rs. 25,000, but since in the instant case the minimum penalty was Rs. 4,329, the IAC had no jurisdiction to levy the penalty and, therefore, the Tribunal cancelled the penalty. On reference: HELD From a perusal of the sections 271(1)(c ) and 274(2), it was evident that, before amendment, the ITO could deal with penalty proceedings in case the penalty imposable was more than Rs. 1,000. If the penalty exigible…

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