Judgment:
A. Pasayat, J.
1. At the instance of Messrs. S. Ramamurty Das and Partners (hereinafter referred to as the 'assessee'), the following question has been referred to this court by the Income-tax Appellate Tribunal, Calcutta Bench 'A', camp at Cuttack (hereinafter referred to as ' the Tribunal'), under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as the ' Act ').
' Whether, on the facts and in the circumstances of the case, the Income-tax Officer did not have jurisdiction to pass the order dated March 30, 1979, under Section 271(1)(c) of the Income-tax Act, 1961, and so his order is not sustainable in the eye of law ?'
2. The background facts as indicated by the Tribunal in the statement of the case drawn up by it are as follows :
The assessee-firm was carrying on the business of executing civil contract works. It submitted its return of income for the assessment year 1974-75 on December 31, 1974, disclosing an income of Rs. 1,77,083, accompanied by a statement showing the gross receipts from contract works at Rs. 21,28,775. A certificate from the Executive Engineer, R. E. Division, Kalahandi, showing gross receipts of Rs. 10,30,876, and deduction therefrom for materials supplied to the extent of Rs. 3,78,189 was also filed. On February 19, 1975, the assessee obtained another certificate from the said Executive Engineer showing gross payment of Rs. 11,49,481 instead of Rs. 10,30,876 as reflected earlier. This certificate was filed before the Income tax Officer on September 23, 1975, for the purpose of claiming adjustment of tax deducted at source, but not for the purpose of revising the original return. In view of the apparent discrepancy, the assessee was asked by the Assessing Officer to reconcile the same. The assessee replied that it had accounted for the net cash receipts and so there was no discrepancy. Not being satisfied with the explanation furnished by the assessee, the assessee was asked by the Assessing Officer to further clarify the position. Since no reply was received, the Assessing Officer prepared a draft assessment order proposing assessment on a total income of Rs. 2,95,608 and sent it to the Inspecting Assistant Commissioner of Income-tax. A copy was also sent to the assessee in terms of Section 144B of the Act. Before the Inspecting Assistant Commissioner, the assessee stated that a revised return had been filed on March 22, 1976, prior to the receipt of the draft assessment order. The draft assessment order was also objected to by the assessee on various grounds. The Inspecting Assistant Commissioner did not accept the objection's of the assessee and approved the draft assessment order as proposed by the Assessing Officer and, accordingly, the assessment was completed on November 19, 1976, on a total income of Rs. 3,34,610 as against Rs. 1,77,083 declared by the assessee. A proceeding under Section 271(1)(c) for the aforesaid discrepancy was initiated and it was observed that there was concealment of the gross receipts and the consequential income. Against the assessment made, an appeal was filed before the Commissioner of Income-tax (Appeals), Orissa, who dismissed the appeal. The assessee carried the matter in further appeal before the Tribunal; The quantum of concealment of income was determined at Rs. 84,502 by the Tribunal. In the pen'alty proceeding under Section 271(1)(c), after consideration of objections, penalty of Rs. 1,20,000 was imposed by an order dated March 30, 1979. The assessee appealed to the Commissioner of Income-tax (Appeals), who confirmed the penalty and dismissed the appeal. The matter was further carried in appeal before the Tribunal Primarily, two stands were taken before the Tribunal in support of the appeal, viz., (i) the Income-tax Officer had no jurisdiction to levy penalty; and (ii) the quantum of penalty was high and excessive. The Tribunal held that the Income-tax Officer had jurisdiction to levy penalty, but reduced the quantum to Rs. 1 lakh.
3. On being moved under Section 256(1) of the Act, the Tribunal has referred the question to this court as indicated above.
4. We have heard Mr. Ray, learned standing counsel for the Department. In spite of notice, the assessee has not entered appearance.
5. A few dates are necessary for the purpose of adjudication of the question referred to us. The return was filed on December 31, 1974, the assessment was completed on November 19, 1976, the penalty proceeding was initiated on the said date and the penalty order was passed on March 20, 1979.
6. Several changes have been introduced in Section 271(1)(c) and Section 274 of the Act. We shall deal with them so far as they are relevant for the case at hand. By the Finance Act, 1964, the word ' deliberately' which occurred in Clause (c) of Section 271(1) was deleted and an Explanation was inserted at the end of Sub-section (1) of Section 271 which is not very material for us. Sub-section (2) of Section 274 of the Act was amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. There was a further change in Section 271(1)(c) in Clause (iii) by the Finance Act, 1968, with effect from April 1, 1968. Prior to the amendment, the penalty leviable was with reference to a certain percentage of the tax sought to be avoided by concealment of the particulars of income or furnishing inaccurate particulars of such income. With a view to make the provisions more deterrent, the quantum was fixed with reference to the amount of concealment.
7. There was an amendment to Sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1975. Sub-section (2) was omitted by the said Amendment Act with effect from April 1, 1976, and the Inspecting Assistant Commissioner had no jurisdiction to deal with the matter imposing penalty. Section 274, as originally enacted with Sub-section (2), read as follows :
'274. Procedure.-- (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 Clause (iii) of subsection (1) of Section 271, if in a case falling under Clause (c) of that subsection, 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.'
8. (In Sub-section (2), as originally enacted, the words and brackets ' 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' were substituted for the words' the minimum penalty imposable exceeds a sum of rupees one thousand ' by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971).
9. The assessee's stand was that at the time the alleged default was committed, it was the Inspecting Assistant Commissioner who could have imposed the penalty and mere deletion of Section 274(2) did not clothe the Income-tax Officer with the power to levy penalty under Section 271(l)(c). Emphasis on this aspect was made with reference to a decision of the apex court in Brij Mohan v. CIT : [1979]120ITR1(SC) . The Tribunal did not accept the plea primarily on the ground that, while Brij Mohan's case : [1979]120ITR1(SC) dealt with a substantive provision relating to imposition of penalty, the question as to who had jurisdiction to impose penalty related to procedure.
10. When penalty is imposed for the concealment of particulars of income, it is the law ruling at the date on which the act of concealment takes place which is relevant. It is wholly immaterial that the income concealed was to be assessed in relation to an assessment year in the past. Penalty is imposed on account of commission of a wrongful act and it is the law operating on the date on which the wrongful act is committed which determines the penalty. So, the quantum of penalty aspect is to be decided with reference to the law as it stood on the date of commission of the wrongful act. But, so far as the procedural aspect is concerned, it is the law which prevailed at the time of passing of the order that determines the jurisdiction or competence of the authority to deal with the matter. There is a distinction between a substantive provision and a procedural provision. The applicability of Section 274 and which authority had the jurisdiction to impose penalty were not matters for consideration by the Supreme Court in Brij Mohan's case : [1979]120ITR1(SC) . It is relevant to mention that section 274 is titled ' Procedure'. In fact, the procedure for imposition of penalty and the authority to impose penalty have been prescribed in the said section. According to us, the provisions contained in Section 274 are procedural in nature. In Jain Brothers v. Union of India : [1970]77ITR107(SC) , it was observed that whatever be the stage at which the satisfaction is reached, the scheme of Sections 274(1) and 275 of the Act is that the order imposing penalty must be made after the completion of the assessment. The crucial date, therefore, for the purpose of penalty is the date of such completion.
11. That being the position, the law to be applied was the date when the assessment proceedings were completed. The Income tax Officer was legally competent to impose penalty as there was no scope for making a reference to the Inspecting Assistant Commissioner after April 1, 1976. In terms of the Amendment Act deleting Sub-section (2) of Section 274 with effect from April 1, 1976, the Inspecting Assistant Commissioner had no jurisdiction to deal with the matter. In our view, therefore, the Tribunal was justified in its conclusion that the income-tax Officer had jurisdiction to impose penalty under Section 271(1)(c). Accordingly, we answer the question referred to us in the affirmative, in favour of the Revenue and against the assessee. No costs.
S.K. Mohanty, J.
12. I agree.