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Vaid Shri Ratan Deo v. Commissioner Of Income-tax

Vaid Shri Ratan Deo v. Commissioner Of Income-tax

(High Court Of Judicature At Allahabad)

IT REVISION NO. 1260 OF 1977 | 09-09-1986

Ojha, Actg. CJ.

1. The following question has been referred to this Court for its opinion by the Tribunal, Allahabad :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that section 274(2) of the Income-tax Act, 1961 is procedural and not substantive thereby confirming the penalties imposed by the ITO for the assessment years 1966-67 to 1969-70 "

2. The facts in a nutshell for deciding the aforesaid question are that the assessee submitted his return in respect of the relevant assessment years before 1-4-1971. The assessments were completed on the basis of those returns. However, subsequently the assessments were reopened and the assessee filed revised returns in 1972. Revised assessment orders were passed in the same year. Subsequently, penalty proceedings were initiated. Orders imposing penalty were passed by the ITO in the years 1974 and 1975.

3. Section 274(2) of the Income-tax Act, 1961 ('the Act') had been amended by the Taxation Laws (Amendment) Act, 1970 with effect from 1-4-1971. The effect of this amendment was that the jurisdiction of the IAC to impose penalty was taken away with effect from the date of the commencement of the Act, namely, 1-4-1971. The case of the assessee was that since the original returns were filed prior to 1-4-1971 the amendment of section 274(2) which was in the nature of a procedural provision had no bearing on the case of the assessee and it was that law which was applicable at the time when the original returns were filed which would apply to the facts of the instant case. According to him since at that time jurisdiction to impose penalty in a sum exceeding Rs. 1,000 vested only with the IAC and not with the ITO, if the IAC who notwithstanding the amendment of section 274(2) by the Taxation Laws (Amendment) Act, continued to have jurisdiction in the instant case and the orders of penalty having been passed not by him but by the ITO were without jurisdiction.

4. Having heard the counsels for the parties we find it difficult to agree with the submission made by the counsel for the assessee. The effect of the amendment of section 274(2) by the Taxation Laws (Amendment) Act, was that jurisdiction to impose penalty up to a sum of Rs. 25,000 was vested, with effect from 1-4-1971, in the ITO and the IAC was divested with this jurisdiction. The matter came up for consideration before a Division Bench of this Court in CIT v. Om Sons [1979] 116 ITR 215 . [LQ/AllHC/1978/411] It was, after construing the provisions of section 274(2) as amended by the Taxation Laws (Amendment) Act, held that if on the date when the IAC passed his final order imposing penalty his jurisdiction to do so had been taken away by the amendment of section 274(2) the order passed by him would be without jurisdiction. The counsel for the assessee has placed reliance on the decisions of certain other High Courts where a contrary view has been taken. Since, however, we are bound by the decision of a Division Bench of this Court in the case of Om Sons (supra) it is not possible for us to take a contrary view. At this place we may point out that some other High Courts have followed the view taken by this Court in the case of Om Sons (supra) . It may further be pointed out that it is settled law that no one has a vested right in the form. The assessee cannot claim to have a substantive right to have the penalty proceedings finalised by a particular officer notwithstanding the fact that the jurisdiction of that officer has by a statutory provision been taken away before final orders could be passed in the penalty proceedings.

5. The counsel for the assessee placed reliance on a decision of the Supreme Court in Brij Mohan v. CIT [1979] 120 ITR 1. [LQ/SC/1979/321] Suffice it to say so far as this case is concerned that it was a case dealing with the quantum of penalty and not with the jurisdiction of an officer who was competent to pass an order of penalty. The said case, in our opinion, is clearly distinguishable.

6. In view of the foregoing discussion our answer to the question refer red to us is in the affirmative, in favour of the department and against the assessee. The department shall be entitled to its costs which is assessed at Rs. 250.

Advocate List

  • None

Bench
  • HON'BLE JUSTICE N.D. OJHA
  • HON'BLE JUSTICE&nbsp
  • R.K. GULATI
Eq Citations
  • LQ
  • LQ/AllHC/1986/578
Head Note

A. Income Tax Act, 1961 — S. 274(2) — Jurisdiction to impose penalty — Delegation of — Statutory provision — Effect of — Held, no one has a vested right in the form — Assessee cannot claim to have a substantive right to have the penalty proceedings finalised by a particular officer notwithstanding the fact that the jurisdiction of that officer has by a statutory provision been taken away before final orders could be passed in the penalty proceedings — Taxation — Penalty — Delegation of powers — Statutory provision — Effect of — Income-tax — Penalty proceedings — Jurisdiction to impose penalty — Delegation of — Statutory provision — Effect of — Penal Laws — Jurisdiction — Delegation of powers — Statutory provision — Effect of (Paras 3 to 5) B. Income Tax Act, 1961 — S. 274(2) — Jurisdiction to impose penalty — Delegation of — Effect of — Held, if on the date when the IAC passed his final order imposing penalty his jurisdiction to do so had been taken away by the amendment of S. 274(2) the order passed by him would be without jurisdiction — Taxation — Penalty — Delegation of powers — Statutory provision — Effect of — Penal Laws — Jurisdiction — Delegation of powers — Statutory provision — Effect of — Income-tax — Penalty proceedings — Jurisdiction to impose penalty — Delegation of — S. 274(2) — Income-tax Act, 1961 — S. 274(2) — Jurisdiction to impose penalty — Delegation of — Effect of — Penal Laws — Jurisdiction — Delegation of powers — Statutory provision — Effect of (Paras 3 to 5)