S.D. Agarwala, J.
1. At the instance of the Commissioner of Income-tax, Allahabad, this reference has been made. The following question has been referred for our opinion :
'Whether, on the facts and circumstances of the case, the Appellate Tribunal was correct in law in holding that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under Section 271(1)(c) of the Act after April I, 1976 ?'
2. M/s. Jagannath Prasad Nankoo Prasad, the assessee, filed a return declaring an income of Rs. 47,605. The Income-tax Officer, however, assessed the income at Rs. 83,708. On appeal, the Tribunal reduced the income to Rs. 54,111. On February 22, 1974, the Income-tax Officer initiated proceedings against the assessee under Section 271(1)(c) of the Income-tax Act, 1961, hereinafter referred to as 'the Act'. The Income-tax Officer was of the opinion that the assessee had concealed the particulars of his income and had furnished inaccurate particulars of such income and consequently was liable to pay penalty. Since the amount of income alleged to have been concealed by the assessee exceeded Rs. 25,000, the Income-tax Officer referred the case to the InspectingAssistant Commissioner under Section 274(2) of the Act for the purpose of imposition of penalty.
3. Section 274(2), as it then stood, was in the following terms :
'(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 the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty.'
4. Section 274 of the Act was amended by the Taxation Laws (Amendment) Act, 1975 (Act No. 41 of 1975). By Section 65 of this Amending Act, Sub-section (2) of Section 274 was omitted. This amendment came into effect from April 1, 1976. The result was that after April 1, 1976, Sub-section (2) of Section 274 quoted above stood omitted and it was not necessary thereafter for the Income-tax Officer to refer the case for imposition of penalty when the concealment exceeded rupees twenty-five thousand.
5. The penalty proceedings which were pending before the Inspecting Assistant Commissioner referred by the Income-tax Officer on February 22, 1974, were decided by the Inspecting Assistant Commissioner on April 14, 1977. By an order dated April 14, 1977, the Inspecting Assistant Commissioner levied penalty of Rs. 45,000 on the assessee.
6. This order dated April 14, 1977, levying penalty by the Inspecting Assistant Commissioner was challenged in appeal before the Appellate Tribunal by the assessee. The Tribunal allowed the appeal and cancelled the penalty imposed on the assessee on the ground that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty after April 1, 1976, in view of the amendment brought about in Section 274 of the Income-tax Act.
7. The Commissioner of Income-tax thereafter made an application under Section 256(1) of the Act before the Tribunal. This application was allowed and the question mentioned above has been referred to us for our opinion.
8. In the instant case, it is not disputed that the penalty proceedings were initiated by the Income-tax Officer on February 22, 1974. These proceedings were initiated before the enforcement of the Taxation Laws (Amendment) Act, 1975. The Inspecting Assistant Commissioner levied penalty on April 14, 1977, that is, after April 1, 1976, when Sub-section (2)of Section 274 was deleted. The only question, therefore, for consideration before us is as to whether the Inspecting Assistant Commissioner has the jurisdiction to levy penalty after the enforcement of the Taxation Laws (Amendment) Act, 1975, even though the proceedings for levy of penalty were initiated before the coming into force of the Act.
9. In CIT v. Om Sons : [1979]116ITR215(All) , a Division Bench of this court had occasion to consider this question and it was held that a court or Tribunal deciding a matter must not only be possessed of jurisdiction initially but must also be clothed with the power to decide the matter when the final order is made. On the basis of this proposition, it was held that even though the proceedings for levying penalty may have been initiated, if on the date when the final order was passed, the Inspecting Assistant Commissioner had no jurisdiction to pass the order levying penalty, then the said order would be without jurisdiction.
10. In a recent case, Ratan Deo v. CIT : [1987]163ITR837(All) , another Division Bench of this court had occasion to consider a similar question. The question arose in the following circumstances. The order imposing penalty was passed by the Income-tax Officer in the year 1974-75. The jurisdiction to impose penalty in respect of concealment of income of less than Rs. 25,000 was taken away from the Inspecting Assistant Commissioner with effect from April 1, 1971. The case of the assessed in that case was that since the returns were filed prior to April 1, 1971, the amendment of Section 274(2) of the Act which was in the nature of a procedural provision had no bearing on the case of the assessee and it was that law which was applicable at the time when the original returns were filed which would apply to the facts of that case. According to him, consequently, since at that time the jurisdiction to impose penalty in a sum exceeding Rs. 1,000 was vested with the Inspecting Assistant Commissioner and not with the Income-tax Officer, it is the Inspecting Assistant Commissioner who, notwithstanding the amendment, continued to have jurisdiction in the case and the orders of penalty having been passed not by him but by the Income-tax Officer, were without jurisdiction.
11. This court after considering the case of CIT v. Om Sons : [1979]116ITR215(All) repelled the contention of the assessee and held that the assessee cannot claim to have a substantive right to have the penalty proceedings finalised by a particular officer notwithstanding the fact that the jurisdiction of that officer has by a statutory provision been taken away before final orders could be passed in the penalty proceedings. In effect, it was held by a Bench that on the date when the penalty is levied, the officer levying penalty must have the power to do so and the mere fact that the penalty proceedings were initiated earlier did not confer any right on the assessee.
12. We respectfully agree with the decisions given by this court in the cases of CIT v. Om Sons : [1979]116ITR215(All) and Ratan Deo v. CIT : [1987]163ITR837(All) .
13. It may also be pointed out here that in the Taxation Laws (Amendment) Act, 1975, by which Section 274(2) was omitted, there is no saving clause to the effect that the proceedings for penalty initiated prior to the coming into force of this Act would continue to be governed by the Act unamended by this Act. From this it is clear that Parliament did not intend to confer jurisdiction on the Inspecting Assistant Commissioner of Income-tax to levy penalty even in a case where the penalty proceedings were initiated prior to the coming into force of the Amendment Act.
14. In view of the above, we answer the question referred to us in the affirmative and against the Revenue. The assessee shall be entitled to costs which we assess at Rs. 200.