COMMISSIONER OF INCOME TAX vs. MOHANLAL AND COMPANY

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME TAX Versus MOHANLAL AND COMPANY -------------------------------------------------------------- Appearance: MR BB NAIK with MR MANISH R BHATT for Petitioner NOTICE SERVED for Respondent No. 1

The ITO made certain additions to the total income of the assessee and referred the matter for penalty to the Inspecting Assistant Commissioner vide his notice dated 19.12.1973 which was issued under Section 274 of the Income Tax Act. The Inspecting Assistant Commissioner heard the matter on May 13 & 21, 1980 and imposed penalty of Rs. 60,000/-. In appeal, the CIT(A) year 1968-69 and 1969-70. The ITO passed the assessment orders on 28.2.1970 and initiated penalty proceedings under Section 271(1)(c) of the Act. Since the penalty to be imposed was to exceed Rs.1,000/-, the ITO referred the case under Section 274(2) as it then stood, to the Inspecting Assistant Commissioner. Pending the proceedings, Section 274(2) was amended with effect from 1.4.1971, as a result of which only cases of penalty in which the income concealed was Rs.25,000/- or more were to be referred to the Inspecting Assistant Commissioner. In the cases referred to the Inspecting Assistant Commissioner the income concealed was less than Rs.25,000/-. On 15.2.1973, the Inspecting Assistant Commissioner passed orders imposing penalty of Rs.24,000/- and Rs.12,500/- respectively for the two assessment years. On appeal, the Appellate Tribunal cancelled the penalty holding that in view of the amendment of Section 274(2), the Inspecting Assistant Commissioner lost his juri iction. On a reference, the High Court affirmed the decision of the Tribunal. On appeal, while reversing the decision of the High Court, the Supreme Court has held as under :-

Applying the principle laid down by the Supreme Court in the above referred to decision to the facts of the present case, we find that the reference of the cases was validly made by the ITO before April 1, 1976 and the Inspecting Assistant Commissioner validly acquired juri iction to pass the orders imposing penalty. The amending Act did not make any provision that references validly pending before the Inspecting Assistant Commissioner should be returned without any final order being passed. Under the circumstances, we are of the opinion that on the facts and in the circumstances of the case and in law, the Appellate Tribunal was not right in holding that the Inspecting Assistant Commissioner of Income-tax had no juri iction to impose the penalty in this case.