Law:

Section:

Section 274(2) [deleted with effect from 1-4-1976] of the Income-tax Act, 1961 - Penalty - Reference to IAC - Assessment year 1973-74 - Whether after 1-4-1976 IAC was not competent to levy penalty even in respect of cases referred to him prior to that date - Held, yes FACTS While completing the assessment on 6-9-1975 for the assessment year 1973-74 the ITO recorded a finding that there was concealment of income and accordingly, issued a notice under section 271(1)(c). As the amount of penalty exceeded Rs. 25,000, he referred the matter to the IAC and on 13-3-1978, the IAC imposed penalty upon the assessee. On appeal the Tribunal vacated the penalty order on the ground that on the date when the IAC had passed the order, he had no jurisdiction, as he was divested of it, inasmuch as, sub-section (2) of section 274 was deleted with effect from 1-4-1976. On reference: HELD In CIT v. Om Sons [1979] 116 ITR 215 (All.)it was held that, if at any time subsequent to the initiation of the proceedings by an amendment made to the law under which the power was conferred on an officer to initiate the proceedings, the said officer is divested of such power without any reservation and the same is vested in another officer, the former loses the power to deal with the case and the latter alone can exercise the statutory power vested in him. In the present case the IAC had assumed the jurisdiction on the footing that the minimum penalty imposable in the instant case was over Rs. 25,000, but on the date when he passed the order his jurisdiction was lost. The proper authority who had jurisdiction to deal with the matter of imposition of penalty was the ITO and not the IAC. Therefore, the imposition of penalty was not justified. CASE REVIEW CIT v. Om Sons [1979] 116 ITR 215 (All.), CIT v. Raj Rani Devi (Smt.) [1979] 116 ITR 358 (All.),CIT v. Ram Lal Vohra [1981] 129 ITR 473 (All.), Ganesh Dass Ram Gopal v. IAC of I.T. [1983] 142 ITR 101 (All.), Mohd. Oais and Co. v. CIT [1983] 142 ITR 104 (All.) and Abdul Azeez (R.) v.CIT [1981] 128 ITR 547 (Kar.)followed and relied upon. CASES REFERRED TO CIT v. Om Sons [1979] 116 ITR 215 (All.), CIT v. Smt. Raj Rani Devi [1979] 116 ITR 358…

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