Decided on January 05,1978



R.N. Misra, J. - (1.) THIS is an application for a writ of certiorari to quash an imposition of penalty under Section 274(2) read with Section 271 of the Income-tax Act of 1961 (hereinafter referred to as "the Act") by the Inspecting Assistant Commissioner of Income-tax (Opposite Party No. 1).
(2.) ASSESSEE is an advocate at Cuttack. For the assessment year 1970-71, he made a return of income of Rs. 3,933. The Income-tax Officer (Opposite Party No. 2) by the order of assessment dated December 31, 1970, determined the income at Rs. 16,500. Upon appeal, the Appellate Assistant Commissioner reduced the income to Rs. 14,300. There is no dispute that the income of the petitioner for the year has been finally determined at that amount. The Income-tax Officer initiated proceedings under Section 271(1)(c) of the Act and referred the matter to the Inspecting Assistant Commissioner as in his view the minimum penalty imposable in the case was in excess of Rs. 1,000. The Inspecting Assistant Commissioner called upon the petitioner to show cause on October 6, 1972, as to why penalty under Section 271(1)(c) of the Act shall not be imposed and, after hearing petitioner's counsel, imposed a penalty of Rs. 12,000 by his order dated 20th of February, 1973. The petitioner carried an appeal to the Income-tax Appellate Tribunal and urged that he imposition of penalty made beyond two years was contrary to law and that the Inspecting Assistant Commissioner had no jurisdiction to impose the penalty. The question of jurisdiction was not examined as pleaded by the petitioner, but the Tribunal agreed with the petitioner's submission that the imposition of penalty was barred by limitation. Section 275 of the Act before being amended by the Taxation Laws (Amendment), Act, 1970, with effect from 1st April, 1971, read thus: "No order imposing a penalty under this Chapter shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced." The argument before the Tribunal was on the basis of this provision. The department relied upon the amended provision of Section 275 which provides: "No order imposing a penalty under this Chapter shall be passed- (a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Appellate Assistant Commissioner under Section 246 or an appeal to the Appellate Tribunal under Sub-section (2) of Section 253, after the expiration of a period of- (i) two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or (ii) six months from the end of the month in which the order of the Appellate Assistant Commissioner or, as the case may be, the Appellate Tribunal is received by the Commissioner, whichever period expires later. ....." The appeal before the Appellate Assistant Commissioner was disposed of on August 3, 1971. The imposition of the penalty on 20th of February, 1973, was thus not barred under the new provision. The Tribunal, however, held that since penalty proceedings were quasi-criminal in nature, the law in force at the time the proceeding was initiated would apply and accordingly allowed the appeal and vacated the imposition of penalty. A case was stated to this court at the instance of the revenue in S.J.C. No. 114 of 1974 (Commissioner of Income-tax v. Bhikari Charan Panda [1976] 104 ITR 73 (Orissa)) and this court held against the assessees and in favour of the revenue on the question of limitation. During the pendency of the said reference made under Section 256(1) of the Act, this writ application was filed agitating the question of jurisdiction of the Inspecting Assistant Commissioner to impose the penalty. Petitioner's contention is that Section 274(2) having been amended with effect from April 1, 1971, and reference to the Inspecting Assistant Commissioner under that provision being maintainable only in cases where the difference between the returned figure and the assessed figure exceeds the sum of Rs. 25,000, the Inspecting Assistant Commissioner had no jurisdiction to impose the penalty in a case which did not satisfy the requirement of the amended Sub-section (2). The same question has been examined by this court at lengthen O.J.C. Nos. 176 and 177 of 1974 (Commissioner of Income-tax v. Dhadi Sahu [1976] 105 ITR 56 (Orissa)) disposed of on December 5, 1975, where, for, the reasons given in the said decision, it has been held that the Inspecting Assistant Commissioner would have no jurisdiction to impose penalty in a case of this type. Though opportunity was given to learned standing counsel to file a counter-affidavit in this case, no counter has been filed obviously on the footing that the decision of this court in the other case supports the stand of the petitioner. We would, accordingly, for the reasons indicated in the said decision hold that the Inspecting Assistant Commissioner, opposite party No. 1, had no jurisdiction to impose penalty under Section 271(1)(c) of the Act on 20th of February, 1973, when the impugned order imposing penalty was passed. Accordingly, the writ application must succeed and the order of imposition of penalty has to be quashed. We, therefore, direct that a writ of certiorari be issued quashing the said order. We make no direction for costs. ;

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