1991 (5) TMI 12

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....quashing the penalty order under section 18(1)(c) of the Wealth-tax Act, 1957, passed by the Inspecting Assistant Commissioner of Wealth-tax, C-Range, Kanpur ? " This reference relates to the assessment years 1969-70 and 1970-71. Simultaneously with the completion of the assessments, the Wealth-tax Officer initiated proceedings under section 18(1)(c) of the Act. He referred the matter to the Inspecting Assistant Commissioner under section 18(3) as it stood at the relevant time. The assessee was subjected to penalty of varying amounts for those years by the Inspecting Assistant Commissioner by his composite order passed under section 18(1)(c)(iii) read with sub-section (3) of section 18 of the Act. In appeal before the Income-tax Appellat....

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....isdiction initially but also be clothed with the power to decide the matter when the final order is passed. Thus, on the date when the Inspecting Assistant Commissioner passed the final order, his jurisdiction to do so had been taken away by the amendment in section 274(2) of the Act. In such a situation, the order passed by him was held to be without jurisdiction. The principle enunciated in the case of Om Sons [1979] 116 ITR 215 (All) was followed and applied by this court in the cases where the question for consideration was whether, after the omission of sub-section (2) of section 274 of the Income-tax Act, 1961, with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975, the Inspecting Assistant Commissioner was compete....

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....applicable to the case in hand. As, in the instant case, the composite penalty order passed by the Inspecting Assistant Commissioner was made on March 25, 1977, i.e., after the date he ceased to be the " competent authority " and was divested of the jurisdiction in view of the amendment made by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, in our opinion, the Inspecting Assistant Commissioner had no power to pass the impugned penalty order under section 18(1)(c) of the Wealth-tax Act. A similar view has also been taken by a Division Bench of the Orissa High Court in CWT v. K. Narayan Rao [1988] 173 ITR 372. In that case, the Wealth-tax Officer had initiated penalty proceedings against the assessee for the as....