COMMISSIONER OF INCOME-TAX Vs. MANOHAR LAL KHANNA

JUDGEMENT

(1.) FOR the assessment year 1964-65, the assessee filed a return declaring his income at Rs. 216 from house property. The assessment was, however, framed on a total income of Rs. 22,930. This income included income from commission to the extent of Rs. 22,712. The asses-see was a commission agent in the business of sale of gold and he had himself agreed to be assessed at this figure. The order of assessment was passed on July 26, 1973, and a notice was issued to the assessee to show cause why penalty be not imposed on him for concealing his income. Vide his order dated March 25, 1976, the ITO imposed a penalty of Rs. 22,712 on the assessee which was equivalent to the income concealed by him. The assessee went in appeal before the AAC, who confirmed the penalty imposed by the ITO. The assessee went in further appeal before the Income-tax Appellate Tribunal, Amritsar. The Tribunal followed a Division Bench judgment of this court C1t v. Bhan Singh Boota Singh [1974] 95 ITR 562, and allowed the appeal. At the instance of the Commissioner, the following two questions of law have been referred to us for our opinion:

(2.) WHETHER, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the penalty order passed by the Income-tax Officer under Section 271 (1) (c) was barred by limitation? " 2. We have heard the learned counsel for the parties. For the first question, the learned counsel for the Revenue has placed reliance on a Division Bench judgment of this court CIT v. Mela Ram Jagdish Raj and Co. [1981] 132 ITR 897. Therein, it was observed as under (p. 900):

(3.) THE aforementioned observations imply that the law in force on the date when the ITO makes up his mind to impose a penalty by issuing relevant notice to the assessee, applies to the penalty proceedings qua the jurisdiction of the authority under the Act, because the power of the original authority or the Tribunal under the Act to impose a penalty is procedural in nature.