1991 PLP 144 (PTD)

GOKAL CHAND MITAL, J: --During the course of assessment for the year 1970-71, the Income-tax Officer added the cost of toria pledged by the assessee with the Shahukara Bank of the value of Rs. 15,360 as income of the assessee from undisclosed sources and proceedings for levy of penalty were initiated under section 271(1)(c) of the Income-tax Act, 1961 (for short "the Act"). The assessee remained unsuccessful in the quantum appeal. In penalty proceedings, the Income-tax Officer levied penalty and his order was confirmed in appeal by the Appellate Assistant Commissioner. On further appeal to the Income-tax Appellate Tribunal, Amritsar, the penalty was cancelled on the point that the Income-tax Officer had no jurisdiction to levy the penalty as it exceeded Rs.1,000, according to the law prevailing, at that time. Section 274(2) of the Act was amended with effect from April 1, 1976, and the jurisdiction of the Income-tax Officer to levy penalty was enhanced from Rs.1,000 to Rs.25,

000. The stand of the assessee was that the date of filing of the return, i.e., September 30,1970, was crucial for finding out the law applicable and at that time, according to the unamended provision of section 274(2)of the Act, the jurisdiction of the Income-tax Officer to levy penalty extended only up to Rs.1,000 and, therefore, the order levying penalty exceeding Rs. 1,000 was without jurisdiction. In support of the argument that the crucial date to find out the law applicable would be the date of filing of return, reliance was placed on Continental Commercial Corporation v. ITO (1975) 100 ITR 170 (Mad) and CIT v. Bhan Singh Boota Singh (1974) 95 ITR 562 (P & H). In view of the aforesaid two decisions, the order levying penalty was cancelled on the ground the Income tax Officer had no jurisdiction to levy penalty beyond Rs. 1,000 on the date when the return was filed. On these facts, the Tribunal has referred the following two questions for the opinion of this Court: "(1) Whether, on the facts and m the circumstances of the case, the Income tax Appellate Tribunal is right in law in holding that section 274(2) as was in force on the date of filing of the return would be applicable" (2) Whether, on the facts and in the circumstances of the case, the Income tax Appellate Tribunal is right in law in holding that the Income-tax Officer had levied the penalty without jurisdiction and in cancelling the penalty on that ground?" The precise question before us has been considered by this Court in CIT v. Raman Industries (1980) 121 ITR 405, CIT v. Mela Ram Jagdish Raj & Co. (1981) 132 ITR 897, Rattan Chand Krishan Lal v. CIT (1984) 148 ITR 597 and by a Full Bench of this Court in CIT v. Mohinder Lal (1987) 168 ITR 101, and following the Supreme Court decision, it was held that to find out the jurisdiction, the date when the Income-tax Officer initiates the proceedings for levy of penalty would govern the jurisdiction as to whether of the Income-tax Officer or the Inspecting Assistant-Commissioner and not the date when the return is filed or the notice pursuant to the initiation of penalty proceedings is given or the matter is taken up by the competent authority for the purpose of levy of penalty. Following the aforesaid decisions, as compared to the ones followed by the Tribunal, the first question is answered, in. the negative, that is, in favour of -the Revenue and against the assessee. We have answered question No. 1 in the abstract as we have no facts before us either in the statement of the case or in the order of the Tribunal cancelling the penalty. No other document is annexed with the statement of the case. Accordingly, in the absence of the date of initiation of proceedings by the Income-tax Officer, the second question cannot be answered and in view of these peculiar circumstances, we direct the Tribunal to decide the matter afresh keeping in view our answer to question No.

1. Z.S./803/T Order accordingly.