COMMISSIONER OF INCOME TAX Vs. BADSHAH PRASAD

JUDGEMENT

(1.) IN this reference under Section 256(1) of the INcome-tax Act, 1961 (hereinafter called "the Act"), the following question of law has been referred to for our opinion :

(2.) THE assessee was assessed in the capacity of an individual. THE assessment years in this consolidated reference are 1967-68 and 1968-69. THE assessee is a contractor executing contracts in the Division of Koshi Project. THE original assessments for the above two years were completed on May 30, 1970, on incomes of Rs. 4,890 and Rs. 6,940 for the two assessment years respectively. Later, the Income-tax Officer came to learn that the assessee had not disclosed certain payments received by him during the relevant years. A proceeding under Section 147 of the Act was, therefore, initiated. In the course of the said proceeding, the Income-tax Officer initiated proceedings for imposition of penalty under Section 271(1)(c) of the Act. THE Income-tax Officer, thereafter, referred the matter to the Inspecting Assistant Commissioner on March 31, 1971. While the penalty proceeding was pending, Section 274(2) of the Act was amended raising the jurisdiction of the Income-tax Officer to impose penalty up to Rs. 25,000. THE Inspecting Assistant Commissioner was vested with jurisdiction to impose penalty only of sums above Rs. 25,000. While the penalty proceeding was still going on, the assessee was pursuing his remedy in appeal in regard to the sums to be assessed, which may be described as quantum appeal. THE said quantum appeal was disposed of by the Appellate Assistant Commissioner on March 20, 1973. After the quantum appeal had been disposed of, the Inspecting Assistant Commissioner by his order dated August 29, 1973, imposed penalties of Rs. 17,000 and Rs. 8,200 for the assessment years 1967-68 and 1968-69, respectively. THE assessee, being aggrieved by the imposition of penalty, appealed to the Tribunal. THE Tribunal deleted the penalty. In the view of the Tribunal, the Inspecting Assistant Commissioner had been divested of his jurisdiction to impose penalty on sums below Rs. 25,000. THE Revenue, being aggrieved by the order of the Tribunal deleting the penalty on the ground that the Inspecting Assistant Commissioner had no jurisdiction to impose penalty on sums below Rs. 25,000, prayed for reference to this court. THE Tribunal has thus referred the question mentioned above for our opinion.

(3.) FOR the reasons stated above, the reference may be answered in favour of the Revenue and against the assessee. In the circumstances of the case, there will be no order as to costs.