1. JUDGMENT : Satish Chandra, C.J. :- The assessee is a liquor contractor of Muzaffarnagar. For the asst. yr. 1968-69 he filed a return of income on 25th January, 1969, showing a total income of Rs. 14,100/-, which included a sum of Rs. 8,000/- as income from a wine shop. The assessment was completed on 22nd May, 1969, on a total income of Rs. 17,100/-.
Subsequently the ITO came to know that assessee had suppressed the account books, though he was maintaining the same. He reopened the assessment.
2. In response to the notice issued u/s. 148 the assessee filed a revised return on 24th October, 1969, showing an income of Rs. 17,100/-, which was the amount on which he was assessed previously. The ITO completed the re-assessment on 13th March, 1972, on a total income of Rs. 32,264/-, which included income from the wine shop at Rs. 25,104/.
3. At the time of the completion of the reassessment proceedings the ITO initiated penalty proceedings u/s 271(1)(c) on the ground that the business income of Rs. 13,252/- had been suppressed by the assessee. In the course he imposed a penalty of Rs. 13,252/- by an order dated 25th March, 1974.
4. The assessee appealed. The Appellate Assistant Commissioner cancelled the penalty on the ground that the assessee was not afforded a reasonable opportunity of hearing.
5. The ITO appealed to the Tribunal. The Tribunal took the view that jurisdiction to take penalty proceedings depended on the state of the law as it was when the default was committed when the assessee filed his return on 24th October, 1969. At that time the ITO had jurisdiction only if the minimum penalty imposable was less than Rs. 1,000/-. In other cases only the Inspecting Assistant Commissioner could take action. The minimum penalty imposable in the case was more than Rs. 1,000/-. Hence the ITO had to jurisdiction. On this view the appeal was dismissed.
6. At the instance of the Commissioner of Income-tax the Tribunal has referred the following question of law for our opinion :
"Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that since the return in which the income had been concealed had been filed on 24-10-1969, it was the Inspecting Assistant Commissioner and not the ITO who had the jurisdiction to impose penalty imposed by the ITO on this ground."
In CIT v. S. Devendra Singh this Court held that the law as it stood on the date of default was applicable in considering the quantum of the imposable. The date of default for such cases is the date when the original return was filed, because concealment is effected in it. This principle is not applicable to a case where the question is as to which authority has jurisdiction to initiate penalty proceedings.
In Addl. CIT v. Mewalal Sankatha Prasad and CIT v. Messrs Om Sons, this Court has held that jurisdiction to take penalty proceedings depends on the point of time when the penalty proceedings are initiated and finalised. The principle of law enunciated was that an officer must have jurisdiction to initiate proceedings and must continue to possess jurisdiction till he passes the order of penalty.
In the present case the proceedings were initiated on or about 13th March, 1972, and they continued till the order imposing penalty was passed on 25th March, 1974. Both these dates are after the amendment of s. 274 with effect from 1st April, 1971. After amendment s. 274 provided that the ITO shall have jurisdiction to take penalty proceedings if the quantum of the concealed income was Rs. 25,000/- or less. In the present case the quantum of concealed income was less than Rs. 25,000/-. Hence the ITO had jurisdiction.
7. The law as it stood till 30th March, 1971, was that jurisdiction depended upon the quantum of imposable penalty. If it was less than Rs. 1,000/-, the ITO, and if it was more than Rs. 1,000/-, the Inspecting Assistant Commissioner had jurisdiction. This law would not be applicable after the amendment of s. 274 with effect from 1st April, 1971. In the present case, s. 274 as it stood after its amendment alone was applicable. Hence the ITO had jurisdiction. The order imposing penalty could not be set aside for lack of authority.
8. We, therefore, answer the question referred to us negative, in favour of the Department and against the assessee. The Commissioner would be entitled to costs, which are assessed at Rs. 200/-.