Jurisdiction to impose penalty after amended section 274(2) cannot be exercised once the new law has taken effect.

The Karnataka HC considered whether a penalty under section 271(1)(c) could validly be imposed by the Inspecting Assistant Commissioner after the amendment to section 274(2) of the Income-tax Act had come into force. The Tribunal had held that, although the matter had been referred earlier, the actual levy occurred after the jurisdictional amendment and was therefore without authority. The Court followed its earlier ruling on the same point and held that once the amended provision had taken effect before the penalty was levied, the officer lacked jurisdiction to impose it. The cancellation of the penalty was upheld and the issue was answered against the Department.

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Issues: Whether the Income-tax Appellate Tribunal was right in cancelling the penalty levied under section 271(1)(c) on the ground that the Inspecting Assistant Commissioner lacked jurisdiction after the amendment to section 274(2) of the Income-tax Act, 1961.

Analysis: The reference concerned penalty for assessment year 1971-72. The Tribunal had held that although the penalty proceedings had been referred to the Inspecting Assistant Commissioner earlier, the penalty was actually levied after the amendment to section 274(2) came into force, and therefore the levy was without authority. The Court followed its earlier decision on the same question and treated the issue as covered by that ruling.

Conclusion: The question was answered in the affirmative and against the Department. The cancellation of the penalty was upheld.

Ratio Decidendi: Where the amended jurisdictional provision has come into force before the actual levy of penalty, the authority lacking jurisdiction under the amended law cannot validly impose the penalty.

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