Penalty jurisdiction follows the law on the date of default, so a later amendment could not validate the order.

Penalty jurisdiction in proceedings under the Income-tax Act is determined by the law in force on the date of the default. Where the assessee's failure to comply with a document-production notice occurred before the amendment that later conferred penalty power on the Transfer Pricing Officer, that amendment could not retrospectively validate the penalty order. The court held that the relevant act for jurisdiction is the wrongful default itself, and a later enlargement of authority does not cure an earlier lack of power. The impugned penalty order was therefore without jurisdiction and was quashed.

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Issues: Whether the penalty under Section 271G of the Income-tax Act, 1961 could be sustained when the alleged default in complying with the document-production notice occurred before the amendment that conferred penalty jurisdiction on the Transfer Pricing Officer.

Analysis: The relevant default occurred when the assessee did not comply with the notice requiring production of documents under Section 92D(3) within the stipulated time. The governing principle is that, in penalty matters, the material date is the date of the wrongful act or default, and the law in force on that date determines the authority competent to impose penalty. The subsequent amendment expanding the Transfer Pricing Officer's jurisdiction could not shift the point of default or validate an order passed for an earlier default. The relied-upon contrary authority was found inapplicable because it did not alter the rule that jurisdiction in a penalty matter is fixed by the date of the offence.

Conclusion: The penalty order was without jurisdiction and could not be sustained; the issue was decided in favour of the assessee.

Final Conclusion: The writ petition succeeded and the impugned penalty order was quashed.

Ratio Decidendi: In penalty proceedings, jurisdiction and liability are governed by the law in force on the date of the default or wrongful act, and a later amendment enlarging the authority's power does not validate action for an earlier default.

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