JUDGMENT
S.P. Bharucha, J.
1. The question we are asked to answer in this reference under s. 256(1) of the IT Act, 1961, made at the instance of the Revenue, reads thus :
“Whether, on the facts and in the circumstances of the case, the IAC had jurisdiction to impose the penalty by passing an order under s. 271 (1)(c) read with s. 274(2) ?”
2. The assessment year concerned is 1966-67. The ITO made the order of assessment on 28th September, 1970. He noted in the order that penalty proceedings under s. 271(1)(c) were started and required the issue of notice under s. 274. The ITO made the reference to the IAC to determine the quantum of penalty only on 15th February, 1973. He did so because the minimum penalty imposable when he made the assessment was Rs. 18,968. By 15th February, 1973, the minimum penalty imposable had been reduced to Rs. 1,882 by reason of the quantum appeal filed by the assessee. The IAC, by his order dt. 27th March, 1973, imposed a penalty of Rs. 3,000 upon the assessee. The assessee carried the matter in regard to the imposition of penalty to the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal). It was contended before the Tribunal that s. 274(2) was amended w.e.f. 1st April, 1971, and that thereafter the IAC had jurisdiction only in case in which the minimum penalty imposable exceeded the sum of Rs. 25,000 whereas in paragraph 5 of this order the IAC had stated that the minimum penalty was Rs. 1,882. Following an earlier view taken by the Nagpur Bench of the Tribunal that the amendment of s. 274(2) was a procedural amendment and applicable in all pending cases, the Tribunal allowed the appeal and quashed the penalty. It is out of this order of the Tribunal that the question referred to us arises.
3. Mr. Jetly, learned counsel for the Revenue, relied upon the judgment of the Nagpur Bench of this court in CIT vs. Rizumal Pherumal (IT Ref. No. 260 of 1976, decided by Chandurkar and Mohta, JJ., on 5th January, 1981). This judgment was followed by this Bench on 14th January, 1987, in IT Ref. No. 149 of 1974 CIT vs. Deorao Shrawan Maundekar. We then read the judgment earlier mentioned as indicating that the relevant date for the purpose of determining who had the power to levy a penalty was the date on which the ITO decided that the penalty must be levied and we followed it. We may note only that neither in the earlier matter nor in the matter before us was there any argument that the date upon which the ITO had recorded his satisfaction in regard to the levy of penalty was other than the date upon which he had made a reference in regard to the quantum of penalty to the IAC.
4. Mr. Thakar, learned counsel for the assessee, drew our attention to a judgment of this court which has taken such an argument into account. This is the judgment in CIT vs. Gangadas Topandas (1984) 150 ITR 437 (Bom.). The ITO passed an order of assessment in this matter on 31st July, 1969, and noted therein that penalty proceedings under s. 271(1)(c) were initiated. He referred the case to the IAC in regard to the imposition of penalty only on 28th June, 1971. The penalty was thereafter imposed. It was challenged on the basis that on the date on which the reference to the IAC was made, the IAC, by reason of the amendment to the relevant provision, had lost the jurisdiction to determine the penalty except where the amount of income in respect of which particulars were concealed exceeded Rs. 25,000. This court came to the conclusion that the making of a reference under s. 274(2) by the ITO was more than a ministerial act. At the time when he made a reference, the ITO had to make a conscious determination of the question of jurisdiction. When the ITO made the reference in that matter, i.e., on 28th June, 1971, it was the ITO and not the IAC who had the jurisdiction to levy the penalty. The reference made to the IAC and the penalty imposed by the IAC were, therefore, bad in law.
A similar view was taken in similar circumstances by the Nagpur Bench of this court in CIT vs. Bhutani Enterprises (1984) 147 ITR 389 (Bom).
5. Having regard to the judgments of this court delivered under circumstances identical to those that exist before us, we must answer the question posed to us in the negative and in favour of the assessee.
6. There shall be no order as to costs.