High Court Of Delhi
CIT vs. D.K. Nawlakha
Sections 271(1)(c), 274(2)
Asst. Year 1973-74
Arijit Pasayat, C.J. & S.K. Aggarwal, J.
IT Ref. No. 129 of 1982
14th July, 2000
R.D. Jolly & Ms. Prem Lata Bansal, for the Revenue : None, for the Assessee
ARIJIT PASAYAT, C.J. :
Pursuant to the directions given by this Court under s. 256(2) of the IT Act, 1961 (in short “the Act”), the following question has been referred for the opinion of this Court by the Tribunal, Delhi Bench-C (in short, “the Tribunal”) :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law incancelling the penalty order passed by the IAC on 14th March, 1978, holding that IAC had no jurisdiction to impose the said penalty under s. 271(1)(c) after the deletion of s. 274(2) of the IT Act w.e.f. 1st April, 1976?”
The factual position is almost undisputed. So far as relevant for adjudication it is as follows : For the asst. yr. 1973-74 before completion of the assessment, the AO, vide assessment order dt. 30th March, 1976, initiated proceedings under s. 271(1)(c) of the Act on the ground that the assessee had concealed or furnished inaccurate particulars of his income. Since the minimum penalty leviable exceeded Rs. 25,000, the AO referred the matter to the IAC(hereafter referred to as “the IAC”), who after giving an opportunity to the assessee and considering the submissions urged on his behalf held that penalty was leviable and imposed a penalty of Rs. 72,960. The order of the IAC was passed on 14th March, 1978. At this juncture, we may note that by the Taxation Laws (Amendment) Act, 1975, sub-s. (2) of s. 274 was deleted from 1st April, 1976. Sec. 274 as it stood as on 1st April, 1971, and after the deletion of sub- s. (2) is as under : As on 1st April, 1971 “(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) Notwithstanding anything contained in cl. (iii) of sub-s. (1) of s. 271, if in a case falling under cl. (c) of that sub-section, the amount of income (as determined by the ITO 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 ITO shall refer the case to the IAC who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty. (3) An AAC, on making an order under this Chapter imposing a penalty, shall forthwith send a copy of the same to the ITO.” As on 1st April, 1976 : “(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. . . . . . (3) An AAC, on making an order under this Chapter imposing a penalty, shall forthwith send a copy of the same to the ITO.”
Learned counsel for the Revenue characterised the deletion as a change of forum and to be procedural and assailed the order of the Tribunal. There is no appearance on behalf of the assessee 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 the change of forum, it cases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when proceedings are initiated in the Tribunal or Court the 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 the different Tribunals or forums [See Hoosein Kasam Dada (India) Ltd. vs. State of Madhya Pradesh AIR 1953 SC 221, State of Bombay vs. Supreme General Films Exchange Ltd. AIR 1960 SC 980, Vitthalbhai Naranbhai Patel vs. CST AIR 1967 SC 344 and Ramesh Singh vs. Cinta Devi (1996) AIR 1996 SC 1560). The question of jurisdiction vis-a-vis the ITO was considered elaborately by the apex Court in CIT vs. Dhadi Sahu (1992) 108 CTR (SC) 444 : (1993) 199 ITR 610 (SC) and in Varkey Chacko vs. CIT (1994) 114 CTR (SC) 207 : (1993) 203 ITR 885 (SC) : TC 49R.1132. As was observed by the apex Court in Varkey Chacko’s case (supra), 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 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’s case (supra) and Varkey Chacko’s case (supra), the apex Court considered the effect of amendment introduced by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1st April, 1971. The position from the date has been indicated supra. Before amendment it read as follows : “Notwithstanding anything contained in cl (iii) of sub-s. (1) of s. 271, if in a case falling under cl. (c) of that sub-section, the minimumpenalty imposable exceeds a sum of rupees one thousand, the ITO shall refer the case to the IAC, who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty.” It was observed that what material was the date on which the references were initiated. When the ITO referred the matter to the IAC in the case at hand, sub-s. (2) of s. 274 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 favour of the assessee.
[Citation : 246 ITR 557]