R. N. MISRA J. - This is an application for a writ of certiorari for quashing the order imposing penalty under section 271(1)(c) of the Income-tax Act of 1961 (hereinafter referred to as the 'Act') by the Inspecting Assistant Commissioner as upheld in revision by the Commissioner of Income-tax.
The petitioner is an assessee under the Act. For the assessment year 1967-68, he was assessed to income-tax by the Income-tax Officer at Titilagarh. The Income-tax Officer found two cash credits of Rs. 4,250 and Rs. 12,000 in the names of Banwarilal Agrawala and Tulsiram Agrawala, respectively. He did not accept the explanation of the assessee and added these amounts as income from other sources. The order of assessment was passed on October 17, 1970, and he directed a proceeding under section 271(1)(c) of the Act to be initiated. In due course, the penalty matter was referred to the Inspecting Assistant Commissioner of Sambalpur under section 274(2) of the Act. On January 24, 1973, the Inspecting Assistant Commissioner issued a notice to the petitioner fixing the matter to February 15, 1973, for hearing. On February 12, 1973, counsel for the petitioner asked for an adjournment and the matter was adjourned to Mar 9, 1973, and not March 8, 1973, as pleaded by the petitioner. A written explanation was filed on behalf of the petitioner. On March 16, 1973, on a consideration of the explanation, the Inspecting Assistant Commissioner levied penalty of Rs. 16,250. Two remedies were open to the assessee against the levy of penalty-an appeal to the Income-tax Appellate Tribunal under section 253(1)(b) of the Act or a revision before the Commissioner of Income-tax under section 264(1) of the Act. Petitioner did not avail of the remedy by way of appeal and moved the Commissioner of Income-tax invoking his revisional powers. By his order dated June 18, 1974, the Commissioner refused to interfere in the matter and upheld the imposition of penalty. This application for certiorari is directed against the imposition of penalty as upheld in revision.
As the hearing opened, learned standing counsel for the revenue raised a preliminary objection that the application has abated under article 226(3) of the Constitution, inasmuch as an alternate remedy by way of appeal was available to the petitioner though he did not avail of it. Undoubtedly, against the levy of penalty by the Inspecting Assistant Commissioner, an appeal lay to the Appellate Tribunal. An assessee suffering imposition of penalty and not preferring an appeal is entitled to move the Commissioner under section 264(1) of the Act for revision of the penalty. Sub-section (4) of section 264 makes it clear that jurisdiction of the Commissioner can be invoked only when the remedy of appeal is waived. Admittedly, the petitioner on waiver of his right of appeal had moved the Commissioner. Learned standing counsel concedes that there is no remedy open against the order of the Commissioner in exercise of a revisional jurisdiction. Petitioner has come before this court asking for a writ of certiorari after the Commissioner disposed of the matter. The question of alternate remedy has to be examined with reference to the order of the Commissioner and not that of the Inspecting Assistant Commissioner. In view of the concession of learned standing counsel that there is no other remedy against the revisional order of the Commissioner, we find no force in the preliminary objection.
It was next contended by learned standing counsel that the case is not covered by sub-article (1) of article 226 of the Constitution as, according to him, neither of the three clauses under the sub-article is attracted. As we shall presently show, the petitioners contention is that the Inspecting Assistant Commissioner who imposed the penalty had no jurisdiction to do so and, therefore, it is said that there has been a contravention of the statutory provision and the injury is indeed of a substantial nature. Therefore, prima facie the matter is covered by article 226(1)(b) of the Constitution. There is also force in the submission of learned counsel for the petitioner that the matter would come within the purview of clause (c).
At the time the Income-tax Officer referred the penalty proceeding to the Inspecting Assistant Commissioner, section 274(2) of the Act read thus :
'Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling under clause (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty.'
By the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, the sub-section was substituted and the new provision ran thus :
Notwithstanding anything contained in clause (iii) of sub-section (1) of section 271, if in a case falling under clause (c) of that sub-section, the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty. 'The Taxation Laws (Amendment) Act of 1975 deleted sub-section (2) of section 274 with effect from April 1, 1976. It is thus clear that the income-tax Officer had appropriately referred the matter of penalty to the Inspecting Assistant Commissioner soon after he had initiated the proceeding by his order dated October 17, 1970. While the penalty matter was pending before the Inspecting Assistant Commissioner, sub-section (2) of section 274 was amended with effect from April 1, 1971. It is conceded that the amended sub-section (2) did not cover the petitioners case, and, therefore, after April 1, 1971, the petitioners case for imposition of penalty could not have been referred to the Inspecting Assistant Commissioner. Counsel for the petitioner has taken the stand that the amendment with effect from April 1, 1971, applied to pending proceedings and the Inspecting Assistant Commissioner lost jurisdiction in the instant case by virtue of the amendment. The decision of this court in the case of Commissioner of Income-tax v. Dhadi Sahu : 105ITR56(Orissa) directly applies. After referring to several authorities, this court observed :
'If the Inspecting Assistant Commissioner had passed final orders prior to the Amending Act of 1970, there would have been no question of loss of jurisdiction, but as the matter was still pending and by change of procedure the references became incompetent, the Inspecting Assistant Commissioner had no jurisdiction to complete the proceedings because he had no longer jurisdiction to deal with the matter of this type.'
Learned standing counsel takes the stand that the ratio in Dhadi Sahus case : 105ITR56(Orissa) is not applicable to the present case on two grounds, namely, (i) sub-section (2) having already been deleted, the law applicable may not be found to be as incorporated in the principal Act; and (ii) the effect of section 6 of the General Clauses Act which had not been considered on the earlier occasion by this court vitiates the decision of the court and the matter, therefore, must be re-examined. Both these contentions do not impress us. The question for consideration is as to whether the Inspecting Assistant Commissioner had jurisdiction when he exercised it in the matter of imposition of penalty. The answer to the question would depend not upon what the law subsequently has been as a result of the amendment with effect from April 1, 1976, but by finding out what the law was when jurisdiction was exercised. Without examining the tenability of learned standing counsels contention on other aspects, it is sufficient to conclude against his contention by saying that on the day when the Inspecting Assistant Commissioner exercised jurisdiction, he did not have any, as held in Dhadi Sahus case : 105ITR56(Orissa) , and, therefore, the exercise of his jurisdiction was a nullity and cannot have legal force. The provisions of section 6 of the General Clauses Act have no application at all. That section provides :
'Effect of repeal-Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made then, unless a different intention appears, the repeal shall not -
(a) revive anything not in force or existing at the time at which the repeal takes effect; or
(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or
(c) affect any right, privilege, obligation or liability, acquired, accrued or incurred under any enactment so repealed; or
(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or
(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture, or punishment as aforesaid;
and any such investigation, legal proceedings or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.'
The instant case is not one of repeal and nothing is said in the section which would save the proceeding before the Inspecting Assistant Commissioner. We do not find any support for the contention of the learned standing counsel. Both the contentions fail and we adopt the ratio of this courts decision in Dhadi Sahus case : 105ITR56(Orissa) for our conclusion that the Inspecting Assistant Commissioner had no jurisdiction to impose penalty on March 16, 1973. He had lost jurisdiction with effect from April 1,1971.
The application is accordingly allowed and the imposition of penalty by the Inspecting Assistant Commissioner as upheld in revision is quashed. Parties are directed to hear their own costs in as much as the petitioner had not taken the present stand either before the Inspecting Assistant Commissioner or specifically before the Commissioner.
PANDA J - I agree.