Law: Income Tax Act, 1961

Section: 256

(a) Income-tax---Penalty---Concealment of income---Penalty to be imposed exceeding Rs.1,000--- Reference of penalty proceedings to Inspecting Assistant Commissioner---Change of law pending reference---Amended law requiring reference only when concealed income exceeds Rs. 25,000---Effect---Inspecting Assistant Commissioner continues to have jurisdiction---Indian Income-Tax Act, 1961, Ss. 271(1)(c) & 274(2)---General Clauses Act, 1897, S. 6(b)---[CIT v. Om Sons (1979) 116 ITR 215 (All.) and CIT (Addl.) v. M.Y. Chandragi (1981) 128 ITR 256 (Kar.) overruled; CIT v. Dhadi Sahu (1976) 105 ITR 56 reversed]. The respondent an individual, had failed to disclose in his returns the income falling to the share of his minor children from house property for the assessment years 1968-69 and 1969-70. The Income-tax Officer passed the assessment orders on February 28, 1970, and initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961. Since the penalty to be imposed would exceed Rs.1,000, the Income Tax Officer referred the case under section 274(2), as it then stood to the Inspecting Assistant Commissioner. Pending the proceedings, section 274(2) was amended with effect from April 1, 1971, as a result of which only cases of penalty in which the income concealed was Rs. 25,000 or more were to be referred to the Inspecting Assistant Commissioner. In the cases referred to the Inspecting Assistant Commissioner the income concealed was less than Rs. 25,000. On February 15, 1973, the Inspecting Assistant Commissioner passed orders imposing penalty of Rs. 24,000 and Rs. 12,500, respectively for the assessment years 1968-69 and 1969-70. On appeal the Appellate Tribunal cancelled the penalty holding that in view of the amendment of section 274(2), the Inspecting Assistant Commissioner lost his jurisdiction. On a reference, the High Court affirmed the decision of the Tribunal. On appeal to the Supreme Court: Held, reversing the decision of the High Court that the reference of the cases was validly made by the Income-tax Officer before April 1, 1971 and the Inspecting Assistant Commissioner validly acquired jurisdiction to pass the orders imposing penalty.…

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