Jurisdictional limits under amended penalty provisions barred initiation and order where concealed income fell below the statutory threshold.

Amendment of Section 274(2) of the Income-tax Act confined the Inspecting Assistant Commissioner's jurisdiction to penalty cases involving concealed income above the prescribed threshold. Where the concealed income was below that limit, a reference made after the amendment and a penalty order passed thereafter were without jurisdiction and could not be sustained. The penalty order was therefore invalid, with the jurisdictional objection answered in favour of the assessee and against the department.

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Issues: Whether the penalty order was invalid for want of jurisdiction in view of the amended Section 274(2) of the Income-tax Act, 1961.

Analysis: The concealed income was Rs. 10,000 and, after the amendment effective from 1 April 1971, the jurisdiction of the Inspecting Assistant Commissioner to initiate penalty proceedings was confined to cases where concealed income exceeded Rs. 25,000. The reference to the Inspecting Assistant Commissioner was made in 1973 and the penalty order was also passed in 1973, when the amended provision was in force. Since the authority lacked jurisdiction on the date of reference as well as on the date of order, the penalty proceedings could not be sustained.

Conclusion: The penalty order was invalid, and the question was answered in the affirmative, in favour of the assessee and against the department.

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