COMMISSIONER OF INCOME TAJ, ORISSA versus DHADI SAHU

Citation: [1992] SUPP. 3 S.C.R. 168 · Decided: 18-11-1992 · Supreme Court of India · Bench: YOGESHWAR DAYAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
. ·, 
COMMISSIONER OF INCOME TAJ( ORISSA 
v ... · 
DHADI SAHU 
NOVEMBER 18, 1992 
[YOGESHWAR DAYAL AND DR. A.S. ANAND, JJ.] 
Income Tax Act, 1961: Sections 271( l)(c) and 274(2)--Penalty--{m-
position of-lurisdiction of the Income Tax Officer/Inspecting Assistant Com-
missione!"-Amendment of provision subsequent to reference to IA.C.-Effect 
C of-Whether jurisdiction of IA.C. ousted even in a pending reference-Order 
.p'Ossed by /A.C. after amendment-whether valid. 
D 
E 
Practice & Procedure: Amendment of provision of statute-Change of 
f ornm not to affect pending actions unless intention to contrary is clearly 
shown. 
Under Section 27l(l)(c) of the Income Tax Act, 1961 as it stood 
before April 1, 1971, the Income-tax Officer had no jurisdiction to impose 
penalty if the minimum penalty imposable exceeded Rs.1,000.00 and in 
such a case he was bound to make a reference to the Inspecting Assistant 
Commissioner, who, on. such reference exercised all the powers conferred 
under Chapter XXI for the imposition of penalty. However, with effect 
from April 1, 1971 when the Amending Act of 1970, by which Section 274(2) 
was amended came into force, the Income-tax Officer could impose penalty 
. 
. 
. 
under Section 271(1)(c) if the amount of income in respect of which the 
particulars were concealed .or inaccurate particulars were furnished did 
F 
not exceed Rs.25,000.00 If the amount exceeded Rs.25,000.00 he was re-
quired to refer to the case to the Inspecting Assistant Commissioner, who 
then got jurisdiction to i~pose penalty •. 
In the instant case, the respondent·assessee, an individual had dis-
G closed in his return for the assessment years, 1968-69 and 1969-70 only his 
own share of the profits of a firm of which he was a partner but failed to 
disclose the income falling to the share of the minor children from house 
property which ostensibly stood in the name of his wife but really belonged 
to the assessee, the wife being only a benanmi. 
H 
The assessment orders were passed on February 23, 19.70 and the 
168 
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C.l.T. v. DHADI SAHU 
169 
Income-tax Officer initiated proceeding~ for the imposition of penalty A 
under Section 271(1)(c) of the Act, and referred the matter to the Ins~ct-
ing Assistant Commissioner under Section 274 (2) of the Act, since the 
penalty imposable exceeded Rs.1,000. Thereafter, on February 15, 1973, 
after the amendment of Section 274(2), the Inspecting Assistant Commis-
sioner passed orders imposing penalties of Rs.24,000 and 12,500 respec-
B 
tively for the two assessment years. 
The respondent-assessee preferred appeals to the Income-tax Appel-
late Tribunal. The Tribunal allowed the respondent- assessee's appeals 
and cancelled the penalties, holding that in view of the amendment made 
to Section 274(2) of the Act with effect from April 1, 1971, the Inspecting C 
Assistant Commissioner had lost his jurisdiction . 
. On the Revenue's application, the Tribunal made a reference to the 
High Court under Section 256(1) of the Act on the question oflaw, whether, 
on a true interpretation of Section 274, as amended by the Taxation Laws D 
(Amendment) Act, 1970, the Inspecting Assistant Commissioner to whom 
the case was referred prior to April 1, 1971, had jurisdiction to impose 
penalty. The Division Bench of the High Court held that even in a reference 
which was pending under Section 274(2) on the date when the Section 
stood amended, the Inspecting Assistant Commissioner could not pass E 
and order imposing penalty if the amount of income concealed did not 
exceed Rs.25,000. In the instant case, the penalty imposable exceeded 
Rs.1,000 but the amount the income in respect of which particulars were 
concealed did not exceed Rs.25,000. 
On the High Court's refusal to grant· certificates of fitness. for 
appeals, the Revenue preferred appeal, by special leave, to this Court. It 
was contended that although the order of imposition of penalty was passed 
F 
by the Inspecting Assistant Commissioner after the Amending Act had 
come into force, yet if the reference made by the Income-tax Officer was 
validly made before that date, the Inspecting Assistant Commissioner G 
continued to have jurisdiction to impose penalty and hence the amendment 
brought out in Section 274(2) with effect from April 1, 1971, was oot 
applicable to pending references. 
Allowing the appeals, this Court 
H 
170 
SUPREME COURT REPORTS [1992] SUPP. 3 s.c.~. 
A. 
HELD: 1.1. The general. principle is that a la

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