Commissioner of Income Tax vs Radheshyam Jaipuria and Bros.

V.A. Mohta, J.—Following questions are referred for opinion of this Court at the behest of the Commissioner Nagpur, u/s 256(1) of the income tax Act, 1961 (''the Act''):

Whether, on the facts and in the circumstances of the case, the law as is stood on the date of filing the returns of income was applicable for the purposes of determining the jurisdiction for imposition of penalty u/s 271(1)(c) of the income tax Act?

Whether on the facts and in the circumstances of the case, the law as it stood on the date on which ITO reached the satisfaction that penalty was called for was applicable for deciding the question of jurisdiction for imposition of penalty u/s 271(1)(c) of the IT Act?

The assessee-firm filed its returns of income for the assessment years 1969-70 and 1970-71 on 14-1-1970 and 31-7-1970, respectively. The assessments were originally completed on income of Rs. 1,174 and Rs. 675, respectively. Since the return did not declare the income arising from the rent received by sub-letting a building ''Jaipuria Mansion'', the ITO subsequently reopened the assessments u/s 147 on the ground that the above income from sub-letting had escaped the assessment for both the years. He made reassessment adding to the total income the income in the sum of Rs. 11,124 and 9,270, respectively. Action for imposing penalty u/s 271(1)(c), of the Act was initiated. He finalised the reassessment on 13-9-1973. Orders imposing penalty were passed, on 26-12-1975 and 29-12-1975, respectively. The order of penalty was quashed by the Commissioner (and this order was maintained by the Tribunal) on the ground that the ITO''s jurisdiction to impose penalty was only up to Rs. 1,000 at a point of time when correct return ought to have been filed. The ITO''s limit was enhanced to Rs. 25,000 from 1-4-1971 and on the basis of law, as it stood on 13-9-1973 as well as 26-12-1975 and 29-12-1975, the ITO had jurisdiction to pass the order well-settled legal position as far as this Court is concerned, is that procedural part of the penalty proceedings would be governed by the law as it stands on the date of the initiation of the proceedings and/or the date of passing of the order In any case the law as obtained at a time when correct return ought to have been filed is not applicable Commissioner of Income Tax Vs. Deorao Shrawan Maundekar, and Commissioner of Income Tax Vs. Abdullabhai Hassanali, .

Hence, question No. 1 is answered in the negative and in favour of the revenue and question No. 2 is answered in the affirmative and in favour of the revenue. No order as to costs.