LexCOMMISSIONER OF INCOME TAX, BANGALORE versus SMT. R. SHARADAMMA
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COMMISSIONER OF INCOME TAX, BANGALORE
v.
SMT. R. SHARADAMl\1A
APRIL 3, 1996
[B.P. JEEVAN REDDY AND SUHAS C. SEN, JJ.[
Income Tax Act, 1961 :
Ss. 271( 1)(c), 27f--<:hange in forum-Effect on pending cases-Penal-
e ty proceedings pending before Inspecting Assistant Commis-
sioner-Meanwhile sub section (2) of s. 274 deleted by Taxation Laws
(Amendment) Ac~ 1975-Held, Inspecting Assistant Commissioner did not
lose jurisdiction to continue with the proceedings pending before him on
31.3.1976 by vinue of deletion of sub-section (2) of s. 274 by Taxation Laws
(Amendment) Act, 1975 w.e.f. 1.4.1976-He was entitled io continue the
D proceedings and pass appropriate orders.
·f General Clauses Ac~ 1897:
S. 6--Deletion of a provision effecting change in forunt-Effect on
E pending cases-A charge in tl1e forum does not affect pending actions unless
an intention to the contrary is clearly shown.
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Commissioner of Income Tax v. Dhadi Sahu, 199 ITR 610,
Manujendra Dutt v. Purendu Prosad Roy Chowdhury, AIR (1967) SC 1419,
relied on.
R. Abdul Azeez v. Commissioner of Income Tax, Kamataka, 128 ffR
547, disapproved.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3169 of
1984.
From the Judgment and Order dated 4.8.83 of the Karnataka High
Court in LT.R.C. No. 126 of 1981.
A. Raghuvir, R. Satish and S.N. Terdol for the Appellant.
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S:_:irinivasan for the Respondent.
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C.LT. v. R. SHARADAMMA
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The following Order of the Court was delivered :
This. appeal is preferred. against the order of the Karnataka High
Court answering the question referred to it under Section 256(1) of the
Income Tax Act in the affirmative, i.e., in favour of the assessee and against
the Revenue. The question referred to the High Court reads :
'Whether. on the facts and in the circumstances 3of the case, the .
l.T A.T. is right in law in cancelling the penalty levied by the .
Inspecting Assistant Commissioner under Section 271{1){c) hold-
ing that the Inspecting Assistant Commissioner had no jurisdiction
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to levy penalty un_der Section 271{1)(c) in view of changed C
provisions or law ?"
Tlie assessment year conce~ned herein is 1972-73.
The High Court followed its earlier decision in R. Abdul Azeez v.
Commissioner of Income Ttu; Kamataka, 128 ITR 547 'and has answered D ·
the question against the Revenue·. In R. 'Abdul Azeez, ·the Karnataka High
Court had taken the view that by virtue of the omission of sub-section {2)
of seltion 274_ by the Taxation Laws (Amendment Act, 1975 with effect.
from April 1, 1976, the penalty· proceedings pending befo;e the Inspecting
Assistant Commissioner on March 31, 1976 cannot continue before him E
thereafter and that he has no jurisdiction to continue those proceedings or
to pass any orders therein. It has been held that any· orders passed by him
on or after April 1, 1976, levying penalty, are without· jurisdiction. The
question is whether the said view is correct. We think not. We are sup-
ported in saying so by the ratio of the decision of this Court in Commis-
sioner of Income Tux v. Dhadi Sahu, (199 ITR 610). The facts in Dhadi F
Sahu are the following : the assessment years' concerned therein· were ·
1968-69 and 1969-70. Assessment orders were passed in respect of the said
assessment years on February 28, 1970. The Income Tax Officer initiated
proceedings for the imposition of penalty under Section 27l(l)(c) of the
Act and the matter was referred to the Inspecting Assistant Commissioner . G
under Section 274(2) to the Act. On the said date, Section 274(2) of the
Act read as follows :
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'Notwithstanding anything contained in_ clause (iii) of sub-section
{1) of Section 271, if in a case falling under clause {c) of that
su_b-section, the minimum penalty imposable exceeds a sum ~f H
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c
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SUPREME COURT REPORTS
[1996] 3 S.C.R.
rupees one thousand, the Income-Tax Officer shall refer the case
to the Inspecting Assistant Commissioner, who shall for the pur-
pose, have :an the power conferred under this Chapter for the
imposition of penalty." ·
it::.
Pending reference of the case before the Inspecting Assistant Com-
missioner, Section· 274(2) was amended with effect from April 1, 1971 by
the Taxation Laws (Amendment) Act, 1970. The amended sub-section (2)
read as follows :
"Notwithstanding anything contained in clause (iii) of sub-section,
(i) of Section 271, if in a case falling under clause (c) of that
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