Commissioner of Income Tax vs Bihari Lal Moti Lal

At the instance of the Revenue, the Appellate Tribunal has referred the following question relating to the assessment year 1975-76 for the opinion of this court :

" Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the Inspecting Assistant Commissioner had no jurisdiction to pass the order of penalty on the date on which it was passed ?"

Undisputedly, reference in penalty proceedings was made to the Inspecting Assistant Commissioner by the Income Tax Officer when the jurisdiction was vested in him. It is said that, by virtue of Section 65 of the Taxation Laws (Amendment) Act, 1975, jurisdiction was taken away from the Inspecting Assistant Commissioner with effect from April 1, 1976, who passed the penalty order on October 6, 1987. This court has held in Commissioner of Income Tax Vs. Metal Goods Manufacturing Co. Pvt. Ltd. and Brindaban Kedarnath, that, for levying penalty, the Inspecting Assistant Commissioner should not only possess jurisdiction on the date of reference made to him by the Income Tax Officer, but he should continue to possess that jurisdiction even on the date of decision of the penalty matter. The Inspecting Assistant Commissioner having been divested of the jurisdiction with effect from April 1, 1976, we hold that he was not competent to levy penalty on that date.

The question is, therefore, answered in the affirmative, that is, in favour of the assessee and against the Revenue. No order as to costs.