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Judgment
Arijit Pasayat, CJ.
On being moved u/s 256(1) of the Income Tax Act, 1961 (''the Act'' for short) the Income Tax Appellate Tribunal, Delhi Bench-A, (''the Tribunal'' for short) has referred the following question for opinion of this Court:
"Whether on the facts and in the circumstances of the case, the Tribunal is right in law in cancelling the penalty of Rs. 55,000/- imposed by the Inspecting Assistant Commissioner by his order dated 31.3.1979, as without jurisdiction and invalid in law, after the deletion of Section 274(2) of the Income Tax Act by Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976 ?"
The factual position, which is almost undisputed, so far as relevant for the purpose of the adjudication, is as follows: For the assessment year 1973-74, before the completion of assessment, by order dated 24th September, 1976, notice was issued by the Assessing Officer u/s 274 read with 271(I)(C) of the Act on 30th March, 1976 for alleged concealment of income by the assessee. subsequently, since the penalty livable exceeded Rs. 25,000/-, the Income Tax Officer referred the matter to the Inspecting Assistant Commissioner ("IAC" for short ) on 26th March, 1979 u/s 274(2) of the Act and the IAC, after hearing the assessed on 30th March, 1979 passed the order imposing penalty on 31st March, 1979. The penalty was levied with reference to the additions sustained by the Tribunal amounting to Rs. 55,011 in the appeal relating to quantum in assessment. At this juncture we may note that by Taxation Laws (Amendment) Act, 1975, sub-section (2) of Section 274 was deleted with effect from 1st April, 1976. Section 274, as it stood as on 1st April, 1971 and after the deletion of sub-section 2 is as under:
As on 1st April, 1971
(1) No order imposing a penalty under this Chapter shall be made unless the assessed has been heard, or has been given a reason able opportunity of being heard.
(2) Notwithstanding anything contained in clause (iii) of sub section (1) of Section 271, if in a case falling under clause (c) of that sub-section, the amount of income (as determined by the Income Tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty five thousand rupees, the Income Tax Officer shall refer the case to Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty.
(3) An Appellate Assistant Commissioner on making an order under this Chapter imposing a penalty, shall forthwith send a copy of the same to the Income Tax Officer.
As on 1st April, 1976.
(1) No order imposing a penalty under this chapter shall be made unless the assessed has been heard or has been given a reasonable opportunity of being heard.
(3) An Appellate Assistant commissioner on making an order under this chapter imposing a penalty, shall forthwith send a copy of the same to the Income Tax Officer.
Learned counsel for the Revenue characterised the deletion as a change of forum and to be procedural and assailed order of the Tribunal. There is no appearance on behalf of the assessed in spite of service of notice.
It is true that no litigant has any vested right in the matter of procedural law. But where the question is one of change of forum, it ceases to be a question of procedure only. Forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. Right becomes vested when proceedings are initiated in the Tribunal or Court of first instance, and unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of change of jurisdiction of different Tribunals or forums. (See: Hoosein Kasam Dada (India) Ltd. Vs. The State of Madhya Pradesh and Others, , State of Bombay Vs. Supreme General Films Exchange Ltd., , Vitthalbhai Naranbhai Patel Vs. Commissioner of Sales Tax, M.P., Nagpur, and Ramesh Singh and another Vs. Cinta Devi and others, ).
The question of jurisdiction of IAC vis-a-vis Income Tax officer was considered elaborately by the Apex Court in Commissioner of Income Tax, Orissa Vs. Dhadi Sahu, and in Varkey Chacko Vs. Commissioner of Income Tax, . As was observed by the Apex Court in Varkey Chacko''s case the penalty for concealment of particulars of income or for furnishing inaccurate particulars of income can be imposed only when the assessing authority is satisfied that there has been such concealment or furnishing of inaccurate particulars. Penalty proceedings Therefore can be initiated only after the assessment order has been made which finds such concealment or furnishing of inaccurate particulars. Which authority has the jurisdiction to impose penalty is what is relevant. In both Dhadi Sahu and Varkey Chacko''s cases (supra) Apex Court considered the effect of amendment introduced by Taxation Laws (Amendment) Act, 1970 with effect from 1st April, 1971. The position from that date has been indicated supra. Before amendment is read as follows:
"Notwithstanding anything contained in Clause (iii) of sub-Sec corporation (1) of Section 271, if in a case falling under clause (c) of that sub-Section, the minimum penalty imposable exceeds a sum of rupees one thousand, the Income Tax Officer shall refer the case to the Inspecting Assistant Commissioner who, shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty."
It was observed that what was material was the date on which the references were initiated. When the Income Tax Officer referred the matter to the IAC in the cases at hand sub-Section (2) of Section 274(2) had already been deleted and, Therefore, it was only the ITO who had the authority to impose penalty. The question referred Therefore has to be answered in the affirmative i.e. in favor of the assessed and against the Revenue.