Penalty jurisdiction survives a pre-amendment reference, with proceedings continuing despite the 1975 amendment.

A reference made to the Inspecting Assistant Commissioner before the Taxation Laws (Amendment) Act, 1975 took effect did not divest jurisdiction to continue penalty proceedings under section 271(1)(c) of the Income-tax Act, 1961. The prior reference preserved authority to proceed and pass orders according to law, and the Tribunal's contrary view based on the intervening amendment could not stand. The jurisdictional objection was rejected, the question was answered against the assessee and in favour of the Revenue, and the penalty matter was remitted to the Tribunal for decision on merits.

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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 after the Taxation Laws (Amendment) Act, 1975 came into force, where the matter had already been referred to him before 1 April 1976.

Analysis: The reference to the Inspecting Assistant Commissioner had been made before the amendment took effect. The Supreme Court had already held that where such a reference was made before the amendment, the Inspecting Assistant Commissioner could continue the proceedings and pass orders according to law. The same view had been followed by this Court. On that legal position, the Tribunal's view that jurisdiction was lost because of the intervening amendment could not be sustained.

Conclusion: The jurisdictional objection was rejected and the question was answered in the negative, in favour of the Revenue. The penalty issue was remitted to the Tribunal for decision on merits.

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