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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the unamended or amended version of section 274(2) governed the assessee's penalty proceedings; (ii) whether the Income-tax Officer had jurisdiction to pass the penalty order under section 271(1)(c).
Issue (i): Whether the unamended or amended version of section 274(2) governed the assessee's penalty proceedings.
Analysis: The relevant amendment had come into force on 1 April 1971. The jurisdictional scheme after amendment vested power in the Income-tax Officer where the concealed income was below the statutory threshold, and the applicability of section 274(2) had to be tested with reference to the law in force when the penalty order was passed, not merely when the return was filed.
Conclusion: The amended section 274(2) applied, and the earlier provision did not govern the case.
Issue (ii): Whether the Income-tax Officer had jurisdiction to pass the penalty order under section 271(1)(c).
Analysis: On the date of the penalty order, the concealed income was below the threshold attracting the Income-tax Officer's jurisdiction under the amended provision. The power of the Inspecting Assistant Commissioner arose only where the concealed income exceeded the prescribed limit, so the Income-tax Officer was competent to complete the penalty proceedings.
Conclusion: The penalty order passed by the Income-tax Officer was valid and within jurisdiction.
Final Conclusion: The reference was answered against the assessee, and the Tribunal's order quashing the penalty was set aside insofar as it rested on jurisdictional error.
Ratio Decidendi: For penalty proceedings, the governing jurisdictional provision is the law in force when the penalty order is passed, and the authority designated by the amended monetary threshold alone has competence to act.
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