JUDGMENT
R.K. Gulati, J.
1. The Income tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue ;
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Inspecting Assistant
Commissioner had no jurisdiction to pass the order of penalty on the date on which it was passed ? ”
The Inspecting Assistant Commissioner by his order dated February 15, 1977, imposed a penalty of Rs. 99,100 under Section 271(1)(c) read with Sub-section (2) of Section 274 of the Income-tax Act, 1961, on the assessee’s alleged default of concealment. The validity of this order was challenged by the assessee, inter alia, on the ground that the Inspecting Assistant Commissioner had no jurisdiction to impose the impugned penalty after April 1, 1976, with effect from which date the provisions of Sub-section (2) of Section 274 of the Income-tax Act, 1961, stood deleted by Section 65 of the Taxation Laws (Amendment) Act, 1975. The Tribunal accepted the plea relying upon the ratio of the decision of this court in CITv. Om Sons [1979] 116 ITR 215. In the case relied upon by the Tribunal the view taken was that a court or Tribunal deciding a matter must not only be possessed o’f jurisdiction initially but also be clothed with the power to decide the matter when the final order is passed. Thus, on the date when the Inspecting Assistant Commissioner passed the final orders his jurisdiction to do so had been taken away by the amendment in Section 274(2) of the Act. In such a situation, the order passed by him was held to be without jurisdiction.
2. The decision in Om Sons’ case [1979] 116 ITR 215 (All) concerned itself with a problem arising from the amendment in Sub-section (2) of Section 274 introduced by the Taxation Laws (Amendment) Act, 1970, as a result whereof, a reference to the Inspecting Assistant Commissioner, could only be made in cases where the concealed income was found to exceed Rs. 25,000. It was not disputed that the time when the reference was made by the Income-tax Officer to the Inspecting Assistant Commissioner, it was valid under the law, as it then stood. It may be stated that under the unamended provisions, reference to the Inspecting Assistant Commissioner could be made where the minimum penalty imposable for concealment of income exceeded Rs. 1,000. The law laid down in Om Sons’ case [1979] 116 ITR 215 (All) was found equally applicable to the cases where the Inspecting Assistant Commissioner imposed penalty after April 1, 1976, the date when he lost the jurisdiction to impose penalty under Section 271(1){c) of the Act as a result of the amendment in Sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1975. As already noticed, by the Amending Act, 1975, subsection (2) of Section 274 was omitted. In -this connection, a reference may be made to a decision of this court in Ganesh Dass Ram Gopal v.
JAC [1983] 142 ITR 101. That decision was subsequently followed by this court in a number of other cases, and in this connection we may refer to the decision of this court in CIT v. Lal Chand Jain [1989] 180 ITR 448, in which one of us was a party (R. K, Gulati J.). In the last mentioned case, it was held that as on the date when the Inspecting Assistant Commissioner passed his final order, his jurisdiction to do so had been taken away by the amendment of Section 274(2) of the Income-tax Act, the order passed by the Inspecting Assistant Commissioner was without jurisdiction. The legislative intention of the amendment was to destroy the continuance of the power of the Inspecting Assistant Commissioner even in respect of matters which had already been referred to him by the Income-tax Officer prior to April 1, 1976, and the Inspecting Assistant Commissioner had no jurisdiction to pass the penalty order under Section 271(1)(c) on or after April 1, 1976.
3. As in the instant case, the Inspecting Assistant Commissioner had passed the impugned penalty order on February 15, 1977, which is subsequent to the amendment brought about by the Amending Act of 1975, the 6rder was clearly without jurisdiction and void. In this view of the matter, in our opinion, the Income-tax Appellate Tribunal was justified in taking the view that the Inspecting Assistant Commissioner had no jurisdiction to pass the order of penalty on the date on which it was passed.
4. The question referred to us is, accordingly answered in the affirmative, in favour of the assessee and against the Department. The assessee shall be entitled to its costs which we assess at Rs. 250.
