Pending penalty references survive omission of section 274(2), preserving jurisdiction to complete proceedings under the earlier regime.

Where penalty proceedings under section 271(1)(c) had been validly referred to the Inspecting Assistant Commissioner under the pre-amendment scheme, the later omission of section 274(2) by the Taxation Laws (Amendment) Act, 1975 did not divest that authority of jurisdiction to complete the pending matter. The governing principle was that a validly initiated and referred penalty proceeding survives the statutory omission and may be brought to conclusion under the earlier regime. The Tribunal's contrary view was therefore incorrect, and the Inspecting Assistant Commissioner retained jurisdiction to impose the penalty.

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Issues: Whether the Inspecting Assistant Commissioner retained jurisdiction to impose penalty under section 271(1)(c) of the Income-tax Act, 1961, after section 274(2) had been omitted by the Taxation Laws (Amendment) Act, 1975, in respect of a matter already referred before the omission.

Analysis: The reference to the Inspecting Assistant Commissioner had been made under the then-existing statutory scheme. The omission of section 274(2) did not divest the authority of jurisdiction to complete penalty proceedings already validly referred. The issue was covered by binding precedent holding that pending penalty references survived the amendment and could be brought to completion despite the later omission of the provision.

Conclusion: The Inspecting Assistant Commissioner had jurisdiction to impose the penalty, and the contrary view of the Tribunal was incorrect.

Ratio Decidendi: Where penalty proceedings have been validly referred to the Inspecting Assistant Commissioner under the pre-amendment regime, the subsequent omission of section 274(2) does not extinguish jurisdiction to complete those proceedings.

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