COMMISSIONER OF INCOME TAX, BANGALORE vs. SMT. R. SHARADAMMA

CIVIL APPEAL No. 3169/1984Supreme Court[1996] 3 S.C.R. 120003 April 1996Bench: 2 JudgesAuthor: B.P. JEEVAN REDDY, S.C. SEN B COMMISSIONER OF5 pages
AI SummaryAllowed

What were the facts?

The appeal concerns assessment year 1972-73. The Income Tax Officer initiated penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961, and referred the case to the Inspecting Assistant Commissioner (IAC) as per Section 274(2). Subsequently, sub-section (2) of Section 274 was deleted by the Taxation Laws (Amendment) Act, 1975, effective April 1, 1976. The High Court, following its earlier decision in R. Abdul Azeez v. Commissioner of Income Tax, Karnataka, held that the IAC lost jurisdiction to continue the penalty proceedings after March 31, 1976, and any orders passed thereafter were without jurisdiction. The Revenue appealed this decision.

What did the Supreme Court hold?

The Supreme Court held that the Inspecting Assistant Commissioner (IAC) did not lose jurisdiction to continue with the penalty proceedings pending before him on March 31, 1976, despite the deletion of sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1970, effective April 1, 1976. The Court relied on the principle that a change in forum does not affect pending actions unless an intention to the contrary is clearly shown, as established in Commissioner of Income Tax v. Dhadi Sahu and Manujendra Dutt v. Purendu Prasad Roy Chowdhury. Once a reference was validly made to the IAC, he retained jurisdiction to deal with the matter. The Amending Act did not contain any provision for returning pending references. The Court disapproved of the contrary view taken by the Karnataka High Court in R. Abdul Azeez v. Commissioner of Income Tax, Karnataka. Therefore, the IAC was entitled to continue the proceedings and pass appropriate orders. The appeal was allowed, and the question was answered in favour of the Revenue.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal (ITAT) was right in law in cancelling the penalty levied by the Inspecting Assistant Commissioner (IAC) under Section 271(1)(c), holding that the IAC had no jurisdiction to levy penalty in view of changed provisions of law? (Mixed law and fact, concerning Section 271(1)(c) and Section 274 of the Income Tax Act, 1961). Assessee's Contention (as per High Court's decision): The deletion of sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1975, effective April 1, 1976, divested the IAC of jurisdiction to continue penalty proceedings pending before him on March 31, 1976. Therefore, any penalty levied by the IAC on or after April 1, 1976, was without jurisdiction. This view was supported by the Karnataka High Court's decision in R. Abdul Azeez v. Commissioner of Income Tax, Karnataka. Revenue's Contention (as per the Supreme Court's decision): The deletion of sub-section (2) of Section 274 did not affect the jurisdiction of the IAC to continue with proceedings validly initiated and pending before him prior to the amendment. This position is supported by the principle laid down in Commissioner of Income Tax v. Dhadi Sahu and Section 6 of the General Clauses Act, 1897.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 274,Section 256(1),Section 6

AI-generated summary — verify with the full judgment below

.A B COMMISSIONER OF INCOME TAX, BANGALORE v. SMT. R. SHARADAMl\1A APRIL 3, 1996 [B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.[ Income Tax Act, 1961 : Ss. 271( 1)(c), 27f--<:hange in forum-Effect on pending cases-Penal- e ty proceedings pending before Inspecting Assistant Commis- sioner-Meanwhile sub section (2) of s. 274 deleted by Taxation Laws (Amendment) Ac~ 1975-Held, Inspecting Assistant Commissioner did not lose juri iction to continue with the proceedings pending before him on 31.3.1976 by vinue of deletion of sub-section (2) of s. 274 by Taxation Laws (Amendment) Act, 1975 w.e.f. 1.4.1976-He was entitled io continue the D proceedings and pass appropriate orders. ·f General Clauses Ac~ 1897: S. 6--Deletion of a provision effecting change in forunt-Effect on E pending cases-A charge in tl1e forum does not affect pending actions unless an intention to the contrary is clearly shown. F G Commissioner of Income Tax v. Dhadi Sahu, 199 ITR 610, Manujendra Dutt v. Purendu Prosad Roy Chowdhury, AIR (1967) SC 1419, relied on. R. Abdul Azeez v. Commissioner of Income Tax, Kamataka, 128 ffR 547, disapproved. CIVIL APPELLATE JURI ICTION: Civil Appeal No. 3169 of 1

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