GULATI, J. - (1.) AT the instance of the Revenue, under S. 256(1) of the IT Act, 1961 ('the Act') the following question of law has been referred for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the IAC had no jurisdiction to pass the order of penalty on the date on which it was passed?"
(2.) THE controversy involved in the aforesaid question is whether the penalty proceedings were initiated by the ITO for the concealment of income under S. 271(1)(c) of the Act, before the enforcement of the Taxation Laws (Amendment) Act, 1975, which came into effect from 1st April, 1976, and the IAC levied the penalty on a reference being made him under sub-s. (2) of S. 274 of the Act after 1st April, 1976, i.e., after the deletion of sub-s. (2) of S. 274, as to whether such a penalty order could in law be sustained. A similar controversy was decided by a Division Bench of this Court in CIT vs. Om Sons 1978 CTR (All) 407 : (1979) 116 ITR 215 (All), where it was held that a Court or that Tribunal deciding the matter must not only be possessed of jurisdiction initially but also be clothed with the power to decide the matter when the final order is passed. Thus, as on the date when the IAC passed the final order, his jurisdiction to do so had been taken away by the amendment in S. 274(2), the order passed by him was without jurisdiction. The decision in the above case has been followed by this Court in a number of other cases involving similar controversy. A reference in this connection may be made to CIT vs. Jagannath Prasad Nankoo Prasad (1987) 65 CTR (All) 143 : (1987) 168 ITR 52 (All) and CIT vs. Lal Chand Jain (1989) 79 CTR (All) 76 : (1989) 180 ITR 448 (All) in which one of us (R.K. Gulati, J) was a party. The view expressed in this case was as under : "Held, that, as on the date when the IAC passed his final order, his jurisdiction to do so had been taken away by the amendment of S. 274(2), the order passed by the IAC was without jurisdiction. The Legislative intention was to destroy the continuance of the power of the IAC even in respect of matter's which had been referred to him by the ITO prior to 1st April, 1976, and the IAC had no jurisdiction to pass the penalty order under S. 271(1)(c) on or after 1st April, 1976, and the proper authority who had jurisdiction to deal with the matter of imposition of penalty was the ITO." (p. 449) Following the view taken in the aforesaid cases, with which we are bound, we hold that the IAC had no jurisdiction to pass the penalty order after the enforcement of the taxation Laws (Amendment) Act, 1975, w.e.f. 1st April, 1976, even though the proceedings for levy of penalty were initiated before coming into force of the Amendment Act. We, accordingly, answer the question referred to us in the affirmative, in favour of the assessee and against the Department. There shall be no order as to costs.;