Law:

Section:

section 274(2) [as it stood prior to 1-4-1976] of the Income-tax Act, 1961 - Penalty - Reference to IAC - ITO referred matter to IAC on 11-9-1975 and IAC imposed penalty on 23-3-1977 - Whether IAC had jurisdiction to impose penalty - Held, yes Facts The case for levy of penalty under section 271(1)(c) was referred by the ITO to the IAC for further proceedings on 11-9-1975. The IAC imposed penalty on 23-3-1977. The Tribunal held that the IAC had jurisdiction to impose penalty. On reference : Held The Act or the Rules made thereunder did not prescribe any form in which a reference was required to be made under section 274(2). The answer to the question as to which was the date when the reference was made, will depend upon the ascertainment of the fact when the ITO, who had jurisdiction, has moved the IAC having jurisdiction to initiate proceedings against an assessee for imposition of penalty under section 274(2). As the ITO, in the instant case, had referred to the IAC having jurisdiction the question of imposition of penalty under section 271(1)(c) on 11-9 1975, a valid reference was made by the ITO to the IAC prior to 1-4-1976 when section 274(2) was deleted. Hence, the IAC had jurisdiction to impose penalty under section 271(1)(c ) on the assessee. Case referred to CIT v. A.N. Tiwari [1980] 124 ITR 680 (MP). P.M. Choudhary for the Applicant. R.C. Mukati for the Respondent. ORDER Sohani, J. - By a reference under section 256(1) of the Income-tax Act, 1961 ('the Act'), the Tribunal, Indore Bench has referred the following question of law to this Court for its opinion: "Whether, on the facts and in the circumstances of the case, the IAC had any jurisdiction to impose penalty under section 271(1)(c) of the Income-tax Act, 1961, on 23-3-1977 after sub-section (2) of section 274 was deleted by the Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976?" 2. When the reference came up for hearing before a Division Bench of this Court, the Court by its order dated 17-9-1980, directed the Tribunal to send a supplementary statement of the case and specify the date on which the matter regarding imposition of penalty was referred by the ITO to the IAC. In pursuance…

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