Pending penalty proceedings survived omission of section 274(2), preserving jurisdiction to complete action under section 271(1)(c).

Penalty proceedings initiated before the omission of section 274(2) on 1 April 1976 remained validly pending, and the Inspecting Assistant Commissioner retained jurisdiction to complete them under section 271(1)(c). The statutory deletion did not divest authority over proceedings already commenced before the amendment. The Tribunal was therefore incorrect in cancelling the penalty for want of jurisdiction.

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Issues: Whether the Inspecting Assistant Commissioner retained jurisdiction to levy penalty under section 271(1)(c) of the Income-tax Act, 1961, where the penalty proceedings had been initiated before the omission of section 274(2) with effect from 1 April 1976.

Analysis: The relevant assessment year was 1972-73 and the penalty proceedings were initiated on 10 February 1976, before the statutory amendment. The omission of section 274(2) with effect from 1 April 1976 did not divest the authority of jurisdiction in respect of proceedings already initiated and pending before the amendment. The governing principle applied was that pending penalty proceedings could validly be continued and concluded after the amendment.

Conclusion: The Inspecting Assistant Commissioner had jurisdiction to pass the penalty order, and the Tribunal was wrong in cancelling the penalty on the ground of lack of jurisdiction.

Ratio Decidendi: Where penalty proceedings are initiated before the deletion of the enabling jurisdictional provision, the authority retains power to continue and dispose of those pending proceedings notwithstanding the subsequent amendment.

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