1975 (9) TMI 29 - HC - Income Tax

High Court upholds penalty order within limitation period, rejects Tribunal's view. Commissioner has jurisdiction.

The High Court held that the penalty order made by the Inspecting Assistant Commissioner was within the limitation period post-amendment, rejecting the ... Charitable Purpose, Charitable Trust, General Public Utility, Not Involving The Carrying On Of Any Activity For Profit Issues:1. Interpretation of penalty order time-bar under section 271(1)(c) and section 274(2) pre and post the Taxation Laws (Amendment) Act, 1970.2. Jurisdiction of the Inspecting Assistant Commissioner under section 274(2) post-amendment.3. Validity of the cancellation of penalty by the Tribunal.Detailed Analysis:1. The case involved questions regarding the time-bar of a penalty order made by the Inspecting Assistant Commissioner under section 271(1)(c) and section 274(2) before and after the Taxation Laws (Amendment) Act, 1970. The Tribunal held the penalty order was time-barred if the Amendment Act applied, or the Inspecting Assistant Commissioner lacked jurisdiction if the Amendment Act did not apply. The High Court determined that the new section 275(b) applied, extending the limitation period to March 31, 1972, making the penalty order within time. The Tribunal's view on the limitation was incorrect, and the penalty was held to be within the limitation period post-amendment.2. The jurisdiction of the Inspecting Assistant Commissioner under section 274(2) post-amendment was also challenged. The High Court emphasized that litigants have vested rights in procedural laws unless expressly or impliedly stated otherwise by the legislature. Citing the principle from Colonial Sugar Refining Company v. Irving, the High Court concluded that the Amendment Act did not affect the jurisdiction of the Inspecting Assistant Commissioner in pending matters. Therefore, the Inspecting Assistant Commissioner had the jurisdiction to dispose of the penalty proceedings against the assessee-firm. The Tribunal's decision that the Inspecting Assistant Commissioner lacked jurisdiction was deemed incorrect by the High Court.3. The Tribunal had not delved into the merits of the case, deciding solely on the preliminary points of limitation and jurisdiction of the Inspecting Assistant Commissioner. The High Court found the Tribunal's conclusions on these points to be erroneous. Consequently, the High Court answered the referred questions affirmatively on the penalty order's time-bar and the Inspecting Assistant Commissioner's jurisdiction, and negatively on the cancellation of the penalty. The matter was remanded back to the Tribunal for a decision on the case's merits, with the assessee directed to pay the costs of the reference to the Commissioner.