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PETITIONER: COMMISSIONER OF INCOME TAX, BANGALORE

       Vs.

RESPONDENT: SMT.R.SHARADAMMA

DATE OF JUDGMENT:       03/04/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  JT 1996 (4)    90        1996 SCALE  (3)343

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      This appeal  is preferred  against  the  order  of  the Karnataka High  Court answering  the question referred to it under  Section   256(1)  of   the  Income  Tax  Act  in  the affirmative, i.e., in favour of the assessee and against the Revenue. The question referred to the High Court reads:      "Whether on  the facts  and in  the      circumstances  of   the  case,  the      I.T.A.T.  is   right  in   law   in      cancelling the  penalty  levied  by      the      Inspecting       Assistant      Commissioner     under      Section      271(1)(C)    holding    that    the      Inspecting  Assistant  Commissioner      had no jurisdiction to levy penalty      under Section  271(1)(c) in view of      changed provisions of law?" The assessment  year concerned  herein is  1972-73. The High Court followed  its earlier  decision in  R.Abdul  Azeez  v. Commissioner of  Income Tax,  Karnataka (128  I.T.R.547) and has answered  the question  against the  Revenue. In R.Abdul Azeez, the  Karnataka High  Court had taken the view that by virtue of  the omission of sub-section (2) of Section 274 by the Taxation  Laws (Amendment)  Act, 1975  with effect  from April 1,  1976, the  penalty proceedings  pending before the Inspecting Assistant  Commissioner on  March 31, 1976 cannot continue  before   him  thereafter   and  that   he  has  no jurisdiction to  continue those  proceedings or  to pass any orders therein.  It has  been held that any orders passed by him on  or after April 1, 1976, levying penalty, are without jurisdiction. The  question is  whether  the  said  view  is correct. We  think not. We are supported in saying so by the ratio of  the decision  of this  Court  in  Commissioner  of Income Tax  v. Dhadi  Sahu (199  I.T.R. 610).  The facts  in Dhadi Sahu are the following: the assessment years concerned therein were  1968-69 and  1969-70. Assessment  orders  were

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passed in  respect of  the said  asessment years on February 28, 1970.  The Income  Tax Officer initiated proceedings for the imposition of penalty under Section 271(1)(c) of the Act and the  matter was  referred to  the  Inspecting  Assistant Commissioner under  Section 274(2)  of the  Act. On the said date, Section 274(2) of the Act read as follows:      "Notwithstanding anything contained      in clause  (iii) of sub-section (1)      of  Section   271,  if  in  a  case      falling under  clause (c)  of  that      sub-section,  the  minimum  penalty      imposable exceeds  a sum  of rupees      one   thousand,    the   Income-Tax      Officer shall refer the case to the      Inspecting Assistant  Commissioner,      who shall for the purpose, have all      the powers  conferred under    this      Chapter  for   the  imposition   of      penalty." Pending  reference   of  the   case  before  the  Inspecting Assistant Commissioner,  Section  274(2)  was  amended  with effect from  April 1,  1971 by the Taxation Laws (Amendment) Act, 1970. The amended sub-section (2) read as follows:      "Notwithstanding anything contained      in clause  (iii) of Sub-section (1)      of Section  271,  if    in  a  case      falling under  clause (c)  of  that      sub-section, the  amount of  income      (as determined  by  the  Income-tax      Officer on  assessment) in  respect      of which  the particulars have been      concealed or inaccurate particulars      have been  furnished exceeds  a sum      of twenty five thousand rupees, the      Income-tax Officer  shall refer the      case to  the  Inspecting  Assistant      Commissioner, who  shall,  for  the      purpose,  have   all   the   powers      conferred under  this  Chapter  for      the imposition of penalty."      [The words  underlined by  us were  substituted for the words "the minimum penalty imposable exceeds a sum of rupees one thousand".]      On  February   15,  1975,   the  Inspecting   Assistant Commissioner passed  orders imposing  penalties for both the said assessment years.      The  assessee   filed  appeals   before  the   Tribunal contending  that  by  virtue  of  the  amendment  effect  by Taxation  Laws   (Amendment)  Act,   1970,  the   Inspecting Assistant Commissioner lost jurisdiction to proceed with the said penalty  proceedings with  effect from  April  1,  1971 inasmuch as  in the  said cases,  the amount  of  income  in respect of  which the  particulars have  been concealed, was less than Rupees twenty five thousand, within the meaning of sub-section (2)  of Section  274 as  amended  in  1970  with effect from  April 1,  1971. The contention was that penalty proceedings cannot  continue before the Inspecting Assistant Commissioner because  the essential  requirement of  amended sub-section (2) was not satisfied. The Tribunal accepted the said plea  and allowed  the appeal.  At the  instance of the Revenue, the  Tribunal stated the following question for the opinion of the Orissa High Court under Section 256(1) of the Act:      "Whether,   on    the   facts   and      circumstances of  the case and on a

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    true interpretation of section 274,      as amended  by  the  Taxation  Laws      (Amendment)    Act,    1970,    the      Inspecting  Assistant  Commissioner      to whom  1971, had  jurisdiction to      impose penalty." The High  Court answered  the  question  in  favour  of  the assessee whereupon  the matter  was brought  to this  Court. This Court  at  the  outset  stated  the  general  principle applicable in this behalf in the following words:      "It may be stated at the outset the      general principle  is  that  a  law      which brings  about a change in the      forum  does   not  affect   pending      actions unless  an intention to the      contrary is  clearly shown.  One of      the  modes   by   which   such   an      intention is  shown is  by making a      provision  for   change   over   of      proceedings from  the court  or the      Tribunal where  they are pending to      the court  or the  Tribunal  which,      under    the    new    law,    gets      jurisdiction to try them." The Court  then observed  that once  a reference was validly made to  the Inspecting  Assistant Commissioner  he did  not lose the  jurisdiction to deal with the matter on account of the  aforesaid  Amendment  Act.  It  pointed  out  that  the Amending  Act  does  not  contain  any  provision  that  the references validly  pending before  the Inspecting Assistant Commissioner should  be returned  without passing  any final order if  the amount  of income  in  respect  of  which  the particulars have  been   concealed  did  not  exceed  Rupees twenty  five  thousand.  The  said  circumstance,  it  held, supported  the   inference  drawn  by  the  Court  that  the Inspecting  Assistant   Commissioner   continued   to   have jurisdiction to impose penalty. This Court observed:      "It is  also true  that no litigant      has any  vested right in the matter      of procedural  law but,  where  the      question is  of change of forum, it      ceases  to   be   a   question   of      procedure only. The forum of appeal      or proceedings is a vested right as      opposed to  pure  procedure  to  be      followed before a particular forum.      The right  becomes vested  when the      proceedings are  initiated  in  the      Tribunal  or  the  court  of  first      instance    and,     unless     the      Legislature has,  by express  words      or   by    necessary   implication,      clearly so  indicated, that  vested      right will  continue inspite of the      change  of   jurisdiction  of   the      different Tribunals or forums." This Court pointed out that the view taken by it is also the view taken  by Gujarat,  Patna, Punjab  and Haryana, Bombay, Calcutta and  Madhya Pradesh  High Courts, whereas Allahabad and Karnataka  High Courts  had taken  a contrary  view. The Court disapproved  the contrary  view taken by the Allahabad and Karnataka High Courts and approved the view taken by the other High Courts.      In our  opinion,  the  principle  underlying  the  said decision is squarely applicable herein. In this case also, a

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reference was  made to the Inspecting Assistant Commissioner in  accordance  with  the  law  in  force  on  the  date  of reference. Once  the Inspecting  Assistant Commissioner  was thus seized of the matter, he did not lose seizin thereof on account of  the deletion  of sub-section (2) of Section 274. This is  also the  principle underlying  Section  6  of  the General Clauses Act.      We may  also mention  that in  Dhadi Sahu,  this  Court referred inter alia to the earlier decision of this Court in Manujendra Dutt  v. Purendu Prasad Roy Chowdhury (A.I.R.1967 S.C.1419) which  too was a case of deletion of Section 29 of the Calcutta Thika Tenancy Act, 1949 by the Amendment Act of 1953. It  was held  by this Court that by virtue of the said deletion, the  Controller, before  whom the  proceeding  was pending, was  not deprived  of the  jurisdiction to  try the matter pending  before him  on the date of coming into force of the Amending Act.      We are,  therefore, of  the view  that  the  Inspecting Assistant Commissioner  did not  lose  the  jurisdiction  to continue with   the  proceedings pending before him on March 31, 1976  by virtue  of the  deletion of  sub-section (2) of Section 274  by the Taxation Laws (Amendment) Act, 1970 with effect from  April 1, 1976. He was entitled to continue with those proceedings  and pass  appropriate orders according to law.      Accordingly,  we  allow  this  appeal  and  answer  the question aforementioned  in the negative, i.e., in favour of the Revenue  and against  the assessee.  There shall  be  no order as to costs.