COMMISSIONER OF INCOME TAX Vs. HOTEL AJAI

JUDGEMENT

(1.) AT the instance of the Revenue, under S. 256(1) of the IT Act, 1961 ('the Act') the following question of law has been referred for the opinion of this Court:

(2.) THE controversy involved in the aforesaid question is, where the penalty proceedings were initiated by the ITO for the concealment of income under S. 271(1)(c) of the Act, before the enforcement of the Taxation Laws (Amendment) Act, 1975, which came into effect from 1st April, 1976, and the IAC levied the penalty on the reference being made to him under sub-s. (2) of s. 274 of the Act after 1st April, 1976, i.e., after the deletion of sub-s. (2) of S. 274, whether such a penalty order could in law be sustained? A similar controversy was decided by a Division Bench of this Court in CIT vs. Om Sons 1978 CTR (All) 407 : (1979) 116 ITR 215, where it was held that a Court or the Tribunal deciding the matter must not only be possessed of jurisdiction initially but also be clothed with the power to decide the matter when the final order is passed. Thus, as on the date when the IAC passed the final order, his jurisdiction to do so had been taken away by the amendment in S. 274(2), the order passed by him was, thus, without jurisdiction. The decision in the above case has been followed by this Court in a number of other cases involving similar controversy. A reference in this connection may be made to CIT vs. Jagannath Prasad Nankoo Prasad (1987) 65 CTR (All) 143 : (1987) 168 ITR 52 (All) : 34 Taxman 156 and CIT vs. Lal Chand Jain (1989) 79 CTR (All) 76 : (1989) 180 ITR 448 (All.) : 47 Taxman 13 in which one of us (R.K. Gulati, J.) was a party. The view expressed in this case was as under: