Law: Income Tax Act, 1961

Section: 271

Income-tax---Penalty---Jurisdiction to levy penalty---Law obtaining on date when penalty proceedings are initiated would govern jurisdiction. The date when the Income-tax Officer initiates the proceedings for penalty would govern the jurisdiction whether of the Income-tax Officer or the Inspecting Assistant Commissioner to levy penalty and not the date when the return is filed or the notice pursuant to the initiation of penalty proceedings is given or the matter is taken up by the competent authority for the purpose. C.I.T. v. Raman Industries (1980) 121 ITR 405 (P & H); C.I.T. v. Mela Ram Jagdish Raj & Co. (1981) 132 ITR 897 (P & H); Rattan Chand Krishan Lal v. C :.T. (1984) 148 ITR 597 (P & H) and C.I.T. v. Mohinder Lal (1987) 168 TTR 101 (P & H) fol. Continental Commercial Corporation v. ITO (1975) 100 ITR 170 (Mad.) and C.I.T. v. Bhan Singh Boota Singh (1974) 95 ITR 562 (P & H) ref. JUDGMENT GOKAL CHAND MITAL, J: --During the course of assessment for the year 1970-71, the Income-tax Officer added the cost of toria pledged by the assessee with the Shahukara Bank of the value of Rs. 15,360 as income of the assessee from undisclosed sources and proceedings for levy of penalty were initiated under section 271(1)(c) of the Income-tax Act, 1961 (for short "the Act"). The assessee remained unsuccessful in the quantum appeal. In penalty proceedings, the Income-tax Officer levied penalty and his order was confirmed in appeal by the Appellate Assistant Commissioner. On further appeal to the Income-tax Appellate Tribunal, Amritsar, the penalty was cancelled on the point that the Income-tax Officer had no jurisdiction to levy the penalty as it exceeded Rs.1,000, according to the law prevailing, at that time. Section 274(2) of the Act was amended with effect from April 1, 1976, and the jurisdiction of the Income-tax Officer to levy penalty was enhanced from Rs.1,000 to Rs.25,000. The stand of the assessee was that the date of filing of the return, i.e., September 30,1970, was crucial for finding out the law applicable and at that time, according to the unamended provision of section 274(2)of the Act, the jurisdiction of the Income-tax Officer to…

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