Penalty reference validity turns on law in force on the date of reference; absent that date, the question could not be answered.

The validity of a penalty reference under section 274(2) of the Income-tax Act must be judged by the law in force on the date of reference. Here, the record did not disclose when the reference to the Inspecting Assistant Commissioner was made, and neither the penalty order, the Tribunal's order nor the statement of case supplied that material date. Without it, the Court could not determine whether the penalty order was within jurisdiction. The first referred question therefore could not be answered, and the second question, raised by the assessee, was not examined. The reference was disposed of without answering the substantive questions.

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Issues: Whether the validity of a penalty reference under section 274(2) of the Income-tax Act, 1961 had to be tested with reference to the law prevailing on the date of reference, and whether the first referred question could be answered in the absence of the date of reference.

Analysis: The governing principle was held to be that the legality of a reference to the Inspecting Assistant Commissioner under section 274(2) must be judged by the law in force on the date of reference. On the facts placed before the Court, neither the order imposing penalty nor the Tribunal's order nor the statement of case disclosed when the reference was made. Without that material date, the Court could not determine whether the penalty order was within jurisdiction. As the first question could not be resolved on the existing record, the second question, which arose at the instance of the assessee, was not examined.

Conclusion: The first referred question remained unanswered because the date of reference was not shown, and the second question was not answered.

Final Conclusion: The reference was disposed of without answering the substantive questions referred.

Ratio Decidendi: The validity of a penalty reference under section 274(2) must be determined with reference to the law on the date of reference, and in the absence of that date the referred question cannot be answered.

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