COMMISSIONER OF INCOME TAX Vs. A SUBRAMANIA PILLAI

JUDGEMENT

(1.) AT the instance of the Department, the Tribunal referred the following question said to arise out of the order of the Tribunal in I. T. A. No. 883/(Madras) of 1978-79 for the assessment year 1970-71 for the opinion of this court under section 256(2) of the Income-tax Act, 1961."Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in holding that the Income-tax Officer had no jurisdiction to levy penalty in this case under section 271(1)(c) of the Income-tax Act, 1961, and that the Inspecting Assistant Commissioner alone can levy the penalty ?"The assessee, during the assessment year under consideration, was doing business in purchase and sale of standard gold jewellery and silver articles, filed his return on December 13, 1970, disclosing an income of Rs. 2, 105. The Income-tax Officer determined the total income in the assessment made by him on January 12, 1973, at Rs. 25, 510 including additions for deficiency in gross profit and cash balance.

(2.) THE Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961. THE assessee submitted before the Income-tax Officer that he had agreed to, additions only with a view to purchase peace. THE Income-tax Officer, however, levied the minimum penalty of Rs. 24, 400 in his order dated March 24, 1975.Aggrieved the assessee filed an appeal before the Appellate Assistant Commissioner, contending that since the penalty imposed exceeds Rs. 1, 000, the Income-tax Officer ought to have referred the case to the Inspecting Assistant Commissioner and the amendment made to section 274(2) by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, would not affect the pending cases and consequently the penalty could have been levied only by the Inspecting Assistant Commissioner. THE contention was not accepted by the Appellate Assistant Commissioner. According to the Appellate Assistant Commissioner, the amendment is only of procedural nature and therefore the Appellate Assistant Commissioner held that the Income-tax Officer had jurisdiction to levy penaltyAggrieved, the assessee filed a second appeal before the Tribunal contending that since the return was filed on December 13, 1970, only the provisions of section 274(2) as it stood on that date would be applicable and hence the Income-tax Officer should have referred the case to the Inspecting Assistant Commissioner and the Income-tax Officer had no jurisdiction to levy the penalty.