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Rattan Chand Krishan Lal Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Reference Nos. 20 and 21 of 1979
Judge
Reported in(1984)43CTR(P& H)219; [1984]148ITR597(P& H)
ActsIncome Tax Act, 1961 - Sections 274(2)
AppellantRattan Chand Krishan Lal
RespondentCommissioner of Income-tax
Appellant Advocate Y.R. Sachdeva, Adv.
Respondent Advocate Ashok Bhan and; Ajay Mittal, Advs.
Cases ReferredAnant Gopal Sheorey v. State of Bombay
Excerpt:
.....by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply communication of a copy of the written order itself, a party who knows about the making of an order cannot ignore the same and allow grass to grow under its feet and do nothing except waiting for a formal communication of the order or to choose a tenuous plea that even though he knew about the order, he was waiting for its formal communication to..........on the facts and in the circumstances of the case, the iac was competent in law to impose the penalty in view of the amended provisions of law, which were effective from april 1, 1976 ?'2. a similar question came up for consideration before a division bench of this court in cit v. mela ram jagdish raj & co. . in that case, it was observed as under (p. 900) :'shri gupta, the learned counsel for the assessee, relies on the decisions of the orissa high court in cit v. dhadi sahu : [1976]105itr56(orissa) and radheshyam agarwalla v. cit : [1978]113itr196(orissa) and also that of the allahabad high court in cit v. om sons : [1979]116itr215(all) , in support of the contention that the jurisdiction of the authority to levy penalty is a matter of procedure and since the procedural law is.....
Judgment:

M.R. Sharma, J.

1. For the assessment year 1971-72, the case of the assessee was taken up on January 28, 1974. It was found by the ITO that the assessee had prima facie concealed an income of Rs. 40,000. On August 6, 1974, the ITO referred the case to the IAC, Ludhiana Range, Ludhiana, on the ground that he only had the jurisdiction to impose a penalty as theincome concealed exceeded Rs. 25,000. The IAC accepted the reference and vide his order, dated April 29, 1977, imposed a penalty of Rs. 20,000 on the assessee. The assessee went up in appeal before the Income-tax Appellate Tribunal, Amritsar Bench, which was dismissed. The assessee claimed a reference on the ground that with effect from April 1, 1976, the ITO had come to be vested with jurisdiction to impose penalty to the extent of unlimited amount and for that reason the order passed by the IAC was without jurisdiction. Its prayer was allowed and the Tribunal has referred the following question of law to us for our decision :

'Whether, on the facts and in the circumstances of the case, the IAC was competent in law to impose the penalty in view of the amended provisions of law, which were effective from April 1, 1976 ?'

2. A similar question came up for consideration before a Division Bench of this court in CIT v. Mela Ram Jagdish Raj & Co. . In that case, it was observed as under (p. 900) :

'Shri Gupta, the learned counsel for the assessee, relies on the decisions of the Orissa High Court in CIT v. Dhadi Sahu : [1976]105ITR56(Orissa) and Radheshyam Agarwalla v. CIT : [1978]113ITR196(Orissa) and also that of the Allahabad High Court in CIT v. Om Sons : [1979]116ITR215(All) , in support of the contention that the jurisdiction of the authority to levy penalty is a matter of procedure and since the procedural law is retrospective, the view taken by the Tribunal in this case should hold the field. We are unable to agree with the view taken by the Orissa High Court and the Allahabad High Court in the cases referred to above. In Dhadi Sahu's case : [1976]105ITR56(Orissa) , it was held that Sub-section (2) of Section 274 is admittedly a provision relating to procedure. This finding, in our considered opinion, has been arrived at on wrong premises. After having recorded the finding that Sub-section (2) of Section 274 of the Act relates to procedure, the learned judges of the Orissa High Court then proceeded to rely on a decision of their Lordships of the Supreme Court in Anant Gopal Sheorey v. State of Bombay, : 1958CriLJ1429 , to hold that the procedural laws are retrospective. There is no dispute with this proposition, but the main question to be determined is as to whether the provisions of Sub-section (2) of s, 274 of the Act relate to procedure or to a question of jurisdiction. In our view, the moment penalty proceedings are initiated by the ITO, the question of jurisdiction immediately arises and, in that context, the provisions of Sub- Section (2) of Section 274 cannot be held to be a provision relating to procedure. We are, therefore, unable to agree with the view taken in the authorities relied upon by Shri Gupta, referred to above.

We are unable to agree with the contention of Shri Gupta that when a reference is made by the ITO under Section 274(2) of the Act, only then, thepenalty proceedings stand initialed. As already observed, reference under Section 274(2) of the Act is only a ministerial act. The moment the ITO passes an order for initiating the penalty proceedings, the proceedings stand initiated and at that .point of time the jurisdiction of the authority, who can pass the penalty order, has to he looked into in accordance with the prevailing provisions of law until and unless the amendment so made is with retrospective effect.'

3. We are bound to follow this view with respect.

4. The question of law referred to us is, therefore, answered against the assessee and in favour of the Revenue. No order as to costs.


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