P.C. Balakrishna Menon, J.
1. The Income-tax Appellate Tribunal, Cochin Bench, has referred the following question of law for the decision of this court under Section 256(1) of the Income-tax Act, 1961 :
'Whether, notwithstanding the omission of Section 274(2) of the Income-tax Act, 1961, by Section 65 of the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, the Inspecting Assistant Commissioner had jurisdiction to levy penalty under Section 271(1)(c) for the assessment year 1973-74? '
The assessee is a registered firm. The firm disclosed an income of Rs. 2,39,000 in its return for the assessment year 1973-74. The Income-tax Officer completed the assessment on January 28, 1974, on income determined at Rs. 2,49,250. Thereafter, there was a search of the business premises of the assessee and oil disclosure of certain materials showing concealment of income, the Income-tax Officer issued notice under Section 148 of the Act. Thereafter, the assessee filed a return disclosing an income of Rs. 3,13,350 made up of Rs. 2,49,250 originally assessed under the head 'Business' and a further sum of Rs. 64,100 under the head 'Other sources'. The Income-tax Officer brought this sum of Rs. 64,100 to tax in the revised assessment made on October 21, 1975, and referred the matter to the Inspecting Assistant Commissioner under Section 274(1)(c) of the Act for imposition of penalty. The Inspecting Assistant Commissioner by order dated October 20, 1977, imposed penalty of Rs. 64,150. The assessee appealed to the Tribunal questioning the jurisdiction of the Inspecting Assistant Commissioner to impose penalty after Section 274(2) was omitted with effect from April 1, 1976, as per Section 65 of the Taxation Laws (Amendment) Act, 1975. The Tribunal, by its order dated March 1, 1980, has set aside the order imposing penalty on the ground that the Inspecting Assistant Commissioner has no jurisdiction to impose penalty after the Taxation Laws (Amendment) Act, 1975, had come into force. The question of law mentioned above is referred to this court at the instance of the Commissioner of Income-tax.
2. When the case came up before a Division Bench, the Revenue raiseda contention that the point involved in the reference is covered by thedecision of a Division Bench of this court in P. M. Kunhimuhammed &Bros.; v. CIT : [1985]152ITR691(Ker) . The Division Bench felt that the question as to whether the Inspecting Assistant Commissioner continues tohave jurisdiction to impose penalty after the deletion of Sub-section (2) of Section 274 by Section 65 of the Taxation Laws (Amendment) Act, 1975, was not considered by the Division Bench in Kunhimuhammed's case and in view of the importance of the question, the case was referred for decision by a Full Bench. Section 271(1) empowers the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals), as the case may be, to impose penalty on satisfaction of the matters specified in Clauses (a), (b) or (c). In the present case, we are concerned with Clause (c) of Section 271(1). The relevant portion of the section is extracted below :
'271(1) If the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that any person--...
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income. he may direct that such person shall pay by way of penalty,--...'
Jurisdiction accordingly is vested in the Income-tax Officer to impose penalty on his satisfaction during the course of assessment proceedings that the assessee has concealed the particulars of his income or has furnished inaccurate particulars of such income. Section 274 relates to the procedure for imposition of penalty. Sub-section (2) of Section 274 as it stood prior to the Taxation Laws (Amendment) Act, 1970 (which came into force on April 1, 1971) reads:
'Section 274(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 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.'
Sub-section (2) of Section 274 was substituted by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971, and the sub-section, after its substitution, reads:
'(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 Rs. 25,000, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferredunder this Chapter for the imposition of penalty.'
The Taxation Laws (Amendment) Act, 1975, which came into force on April 1, 1976, has by Section 65 omitted Sub-section (2) of Section 274 of the Act.
3. As already noticed, jurisdiction to impose penalty is conferred on the Income-tax Officer under Section 271(1) of the Act on his satisfaction of the matters specified in Clauses (a), (b) or (c) during the course of the assessment proceedings. Section 274(2) as it stood prior to its deletion by the Taxation Laws (Amendment) Act, 1975, had conferred the powers of the Income-tax Officer on the Inspecting Assistant Commissioner and the Income-tax Officer was required to refer the case to the Inspecting Assistant Commissioner for the purpose of imposing penalty. In other words, the jurisdiction of the Income-tax Officer under Section 271(1)(c) was conferred by Section 274(2) on the Inspecting Assistant Commissioner in cases where prior to April 1,1971, the penalty imposable exceeded Rs. 1,000 and in cases after April 1, 1971, where the concealment of income or inaccurate particulars furnished exceeded a sum of Rs. 25,000. The Inspecting Assistant Commissioner could act under Sub-section (2) of Section 274 only on reference by the Income-tax Officer. Subject to these conditions, the jurisdiction of the Inspecting Assistant Commissioner under Section 274(2) of the Act was only that of the Income-tax Officer conferred on him for the purpose of imposition of penalty. The Inspecting Assistant Commissioner is divested of his jurisdiction under Section 271(1)(c) of the Act to impose penalty with effect from April 1, 1976, and with effect from that date, the jurisdiction vests in the Income-tax Officer himself.
4. In the present case, the Income-tax Officer referred the case to the Inspecting Assistant Commissioner prior to April 1, 1976, as the concealment of income exceeded Rs. 25,000. The reference was at a time when the Inspecting Assistant Commissioner had jurisdiction and was the authority competent to impose penalty. The Inspecting Assistant Commissioner, however, passed orders imposing penalty after he was divested of his jurisdiction by the omission of Sub-section (2) of Section 274 by Section 65 of the Taxation Laws (Amendment) Act, 1975. The effect of the amendment under Section 65 of the said Act is not merely a divestiture of jurisdiction of the Inspecting Assistant Commissioner but also a revival of jurisdiction of the Income-tax Officer under Section 271(1)(c) of the Act to impose penalty in cases falling thereunder.
5. A Division Bench of this court consisting of Eradi C.J. and one of us Balakrishna Menon J.) in Kunhimuhammed's case : [1985]152ITR691(Ker) , where the Inspecting Assistant Commissioner had imposed penalty after the deletion of Sub-section (2) of Section 274, stated as follows (p. 693):
'More or less the same question has been considered in detail by this court in the judgment recently delivered in ITR No. 42 of 1976 (CIT v. Varkey Chacko : [1982]136ITR733(Ker) ), wherein after a review of the case law on the subject, this court has held that the competence of the authority to exercise the power under Section 271(1)(c) is to be determined with reference to the law in force on the date of initiation of the penalty proceedings. The Tribunal was not, therefore, right in its view that the date of filing of the return is the material date with reference to which the law relating to the matter has to be gathered. The said error committed by the Tribunal has not, however, affected the conclusion reached by the Tribunal in the present case, because on the date of initiation of the penalty proceedings, it was the Inspecting Assistant Commissioner of Income-tax who was the authority competent under Section 274(2) of the Act as it then stood to exercise the power under Section 271(1)(c) in relation to the assessee in this case. We, accordingly, answer the question referred in the affirmative, that is, against the assessee and in favour of the Department'.
Varkey Chacko's case : [1982]136ITR733(Ker) was concerned with the question as to whether the liability for penalty is as per the law applicable on the date of filing of the return or on the date of initiation of the penalty proceedings. The Division Bench consisting of Eradi C. J. and Balagangadharan Nair J. held that the question whether an offence has been committed depends on the law in force on the date of the commission of the offence, but the jurisdiction of the Income-tax Officer or the Inspecting Assistant Commissioner is to be determined with reference to the date of initiation of the penalty proceedings. It was further held that the initiation of penalty proceedings in a case referred to the Inspecting Assistant Commissioner under Section 274(2) of the Act is on the date on which the reference was made. The question as to whether the Inspecting Assistant Commissioner continues to have jurisdiction to impose penalty even after the deletion of Sub-section (2) of Section 274 of the Act did not arise for consideration on the facts of Varkey Chacko's case : [1982]136ITR733(Ker) . In Varkey Chacko's case, the assessee had on April 16, 1970, submitted a return of his income for the assessment year 1968-69. The Income-tax Officer completed the assessment on March 27, 1972, and on the same day initiated penalty proceedings against the assessee on the basis of the finding reached by him in the assessment order that there had been concealment of income by the assessee in respect of an amount which did not exceed Rs. 25,000. After considering the objections put forward by the assessee, the Income-tax Officer by his order dated March 26, 1974, imposed a penalty of Rs. 10,000 for concealment of income. The Appellate Assistant Commissionerbefore whom the matter was carried by the assesses set aside the order of the Income-tax Officer imposing penalty on the ground that the Income-tax Officer had no jurisdiction to levy penalty since the minimum penalty imposable exceeded a sum of Rs. 1,000. The Appellate Assistant Commissioner proceeded on the basis that the jurisdiction of the Income-tax Officer in relation to proceedings for the imposition of penalty was governed by the provisions of Sub-section (2) of Section 274 of the Act as it stood prior to the amendment introduced therein as per the Taxation Laws (Amendment) Act, 1970. Accordingly, the Appellate Assistant Commissioner held that the only competent authority who could levy penalty in the case was the Inspecting Assistant Commissioner. The Department carried the matter in appeal before the Tribunal. The Tribunal confirmed the order of the Appellate Assistant Commissioner holding that the law governing imposition of penalty for concealment of income is the law that was in force on the date on which the return in which the concealment has been made was furnished before the Income-tax Officer and the amendment made by the Taxation Laws (Amendment) Act, 1970, empowering the Income-tax Officer to levy penalty in cases where the minimum penalty imposable is less than Rs. 25,000 had no application because the amendment had not been made retrospective. Answering the question referred to it in favour of the Department, the Division Bench held at page 739 :
'As already indicated by us, the principle that the penal liability of a person in respect of an offence committed by him is governed by the law actually in force as on the date of the commission of the offence cannot have application in determining which authority is competent to initiate proceedings for imposition of penalty in respect of the commission of any offence or infringement under the Act. We are clearly of opinion that the competence or jurisdiction of the authority to initiate the penalty proceedings can be governed only by the law which is in force on the date of such initiation of proceedings. A combined reading of Section 271(1)(c)(iii) of the Act (along with the Explanation thereto) and Sub-section (2) of Section 274 provides a clear indication that under the provisions of Sub-section (2) of Section 274, as they stood prior to the amendment of 1970, the competence of the Income-tax Officer to exercise the power of imposition of penalty against an assessee under Clause (c) of Section 271(1) was to depend upon the findings arrived at by him in the assessment proceedings as to the factum of concealment and the amount of the income in respect of which such concealment had taken place. It is only on arriving at such a finding that concealment has taken place that the question of initiation of penalty proceedings against an assessee can arise.'
In arriving at the above conclusion, the Division Bench has followed the decision of the Supreme Court in Jain Brothers v. Union of India : [1970]77ITR107(SC) , wherein it was held at page 116 (page 739 of 136 ITR).
'It is obvious that for the imposition of penalty it is not the assessment year of the date of the filing of the return which is important but it is the satisfaction of the income-tax authorities that a default has been committed by the assessee which would attract the provisions relating to penalty. Whatever be the stage at which the satisfaction is reached, the scheme of Sections 274(1) and 275 of the Act of 1961 is that the order imposing penalty must be made after the completion of the assessment. The crucial date, therefore, for purposes of penalty, is the date of such completion.'
We are in agreement with the above proposition of law laid down by the Division Bench. But in arriving at the said conclusion, the Division Bench relies also on the decisions of the Punjab and Haryana High Court in CIT v. Raman Industries , of the Gujarat High Court in CIT v. Balabhai & Co. : [1980]122ITR301(Guj) and of the Andhra Pradesh High Court in Addl. CIT v. Dr. Khaja Khutabuddinkhan : [1978]114ITR905(AP) . The Division Bench observes at page 740 :
'We would accordingly hold that the jurisdiction of the Income-tax Officer to impose penalty against an assessee under Section 271(1)(c) of the Act read with Section 274(2) is governed by the state of the law as obtaining on the date of initiation of the penalty proceeding. We are supported in this view by the observations contained in CIT v. Raman Industries and CIT v. Balabhai & Co. : [1980]122ITR301(Guj) . The question that arose in both those cases was whether by reason of the amendment effected in Section 274(2) by Act 42 of 1970, the Inspecting Assistant Commissioner of Income-tax, before whom a penalty proceeding under Section 271(1)(c) of the Act was pending, would cease to have jurisdiction to deal with the matter by reason of the fact that the amount of income in respect of which concealment had taken place did not exceed Rs. 25,000. P. D. Desai J., speaking on behalf of the Bench of the Gujarat High Court in CIT v. Balabhai & Co. : [1980]122ITR301(Guj) , held that the jurisdiction of the Inspecting Assistant Commissioner to deal with a penalty proceeding was governed by the law which was in force at the time when the penalty proceedings were initiated and it remained unaffected by the subsequent change introduced in that law by the Amending Act of 1970. Endorsing the same view, Mittal J., speaking on behalf of the Division Bench of the Punjab High Court in CIT v. Raman Industries observed that the jurisdiction of a tribunal to try a case was a vested right and was to be determined according to the law in force at the time of institution of the proceeding, and, on the basis of the said principle, the jurisdiction of the Inspecting Assistant Commissioner to deal with a penalty proceeding is to be looked at as on the date of initiation of that proceeding and not with reference to any subsequent events. The following observations made by Divan C. J., speaking on behalf of a Division Bench of the Andhra Pradesh High Court, in Addl. CIT v. Dr. Khaja Khutabuddinkhan : [1978]114ITR905(AP) , also give expression to the same view (p. 912) :
'It is clear so far as the question of the Inspecting Assistant Commissioner's jurisdiction is concerned, that at the time when the matter came to be referred to him by the Income-tax Officer and the law as it stood on the date of that reference, he was the only officer who could have heard the matter because the minimum penalty imposable was more than Rs. 1,000. If during the time when the matter was pending before the Inspecting Assistant Commissioner, the law was changed by Act 42 of 1970 with effect from April 1, 1971, and the minimum penalty for the purpose of making a reference to the Inspecting Assistant Commissioner came to be raised to Rs. 25,000, it does not mean that the jurisdiction of the Inspecting Assistant Commissioner was taken away'.'
The question whether by the deletion of Sub-section (2) of Section 274, the Inspecting Assistant Commissioner ceased to have jurisdiction to impose penalty even in cases where the penalty proceedings were initiated before the deletion did not arise for decision before the Division Bench. Nor was there any such question as to the cessation of jurisdiction of the Inspecting Assistant Commissioner by reason of the amendment of Sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1970, in Varkey Chacho's case : [1982]136ITR733(Ker) . The Madhya Pradesh High Court in CIT v. A.N. Tiwari : [1980]124ITR680(MP) and the Patna High Court in CIT v. Jankidas Mohan Lal : [1987]163ITR756(Patna) and in CIT v. Badshah Prasad : [1987]163ITR760(Patna) have followed the same view as was expressed by the High Courts of Punjab and Haryana, Gujarat and Andhra Pradesh in the decisions referred to in the above passage. The Punjab and Haryana High Court in a later Full Bench decision in CIT v. Mohindar Lal has affirmed the same view. The Madhya Pradesh High Court in CIT v. A.N. Tiwari : [1980]124ITR680(MP) , referred to above, stated at page 684:
'It may be stated as a general principle that a law which brings about a change in forum does not affect pending actions unless intention in the contrary is clearly evinced. One of the modes by which such an intention is shown is by making a provision for change over of proceedings, from the court or the Tribunal where they are pending, to the court or the Tribunal which under the new law gets jurisdiction to try them.'
A contrary view is expressed by the Orissa High Court in CIT v. Dhadi Sahu [19761 105 ITR 56 and in Radheshyam Agarwalla v. CIT : [1978]113ITR196(Orissa) , by the Allahabad High Court in CIT v. Om Sons : [1979]116ITR215(All) , by the Karnataka High Court in R. Abdul Azeez v. CIT : [1981]128ITR547(KAR) and by the Gauhati High Court in Kanwarilal Chowkhani v. CWT .
6. In Purshotam Singh v. Narain Singh, AIR 1955 Raj 203, Wanchoo C.J., on behalf of a Division Bench of the Rajasthan High Court, stated at page 206 :
'If the repealing Act provides a new forum where a legal proceeding coining on from before the repealing Act came into force can be pursued thereafter, the forum must be as provided in the repealing Act, and no party can insist that the forum of the repealed Act must continue .'
Considering the effect of amendment of Section 274(2) by the Taxation Laws (Amendment) Act, 1970, R.N. Misra J. (as he then was), stated on behalf of a Division Bench of the Orissa High Court in CIT v. Dhadi Sahu : [1976]105ITR56(Orissa) :
'In this case, the Income-tax Officer while completing the assessments for both these years, being satisfied that penalties were to be imposed under Section 271(1)(c) of the Act, referred the matter to the Inspecting Assistant Commissioner and while the Inspecting Assistant Commissioner was still in seisin of the matter, the amendment referred to above came. Admittedly, after the provision was amended, in the present case, no reference to the Inspecting Assistant Commissioner could have been made because, as rightly found by the Tribunal, the amount of income as determined by the Income-tax Officer on assessment in either year is not in excess of the returned income by Rs. 25,000. The question referred to us can appropriately be answered by examining the effect of the amending provision, namely, whether it took away the jurisdiction of the Inspecting Assistant Commissioner in a pending reference if under the new provision the reference was not open to be made to him. Otherwise stated, the proposition is whether, as a result of the amendment, a reference pending with the Inspecting Assistant Commissioner on the basis of the old provision would no more be maintainable if under the new amended provision that reference was not competent. The answer to the point would depend upon whether the amendment isretrospective in its operation. Sub-section (2) of Section 274 is admittedlya provision relating to procedure.'
After considering the decisions in Anant Gopal Sheorey v. State of Bombay, : 1958CriLJ1429 , Nani Gopal Mitra v. State of Bihar, : 1970CriLJ1396 , Bireswar Moral v. Indu Bhushan Kundu, AIR 1943 Cal 573, Shiv Bhagwan Moti Ram Saraoji v. Onkarmal Ishar Dass, : AIR1952Bom365 and fames Gardner v. Edward A. Lucas [1878] 3 AC 582, the learned judge has concluded at page 62 :
'If the Inspecting Assistant Commissioner had passed final orders prior to the Amending Act of 1970, there would have been no question of loss of jurisdiction, but as the matter was still pending and by change of procedure the references became incompetent, the Inspecting Assistant Commissioner had no jurisdiction to complete the proceedings because he had no longer jurisdiction to deal with the matter of this type.'
This decision was followed in a later decision of the Orissa High Court in Radheshyam Agarwalla v. CIT : [1978]113ITR196(Orissa) .
7. The Supreme Court in P. Mohammed Meera Lebbai v. Thirumalaya Gounder Ramaswamy Gounder : [1966]1SCR574 , considering the effect of Section 5 of the Kerala High Court Act 5 of 1959, held that no party has a vested right under the Travancore Cochin High Court Act, 1125, to have his appeal heard by a Division Bench of the High Court and when the appeal is heard and disposed of by the High Court, no right of the party is infringed merely because it was heard by a single judge and not by a Division Bench of the High Court. Considering the amendment by way of substitution of Section 23(1) of the Foreign Exchange Regulation Act, 1947, by the Amendment Act 39 of 1957, the Supreme Court in Union of India v. Sukumar Pyne : 1966CriLJ946 , held that a person accused of the commission of an offence has no vested right to be tried by an ordinary criminal court and the amendment changing the venue of trial from a Magistrate to the Director of Enforcement in certain cases applies even to cases where the offence was committed prior to the commencement of the Amendment Act. The Supreme Court stated at page 1209 :
'As observed by this court in Shiv Bahadur Singh (Rao) v. State of Vindhya Pradesh : 1954CriLJ1480 , a person accused of the commission of an offence has no vested right to be tried by a particular court or a particular procedure except in so far as there is any constitutional objection by way of discrimination or the violation of any other fundamental right is involved. It is well recognised that 'no person has a vested right in any course of procedure' (vide Maxwell, 11th edition, p. 216), and we see no reason why this ordinary rule should not prevail in the present case. There is no principleunderlying art. 20 of the Constitution which makes a right to any course of, procedure a vested right. Mr. Chatterjee complains that there is no indication in the Amending Act that the new procedure would be retrospective and he further says that this affects his right of appeal under the Criminal Procedure Code. But if this is a matter of procedure, then it is not necessary that there should be a special provision to indicate that the new procedural law is retrospective.'
Considering the effect of the amendment of the Motor Vehicles Act introducing Sections 110A and 110F constituting Motor Accidents Claims Tribunals, the Supreme Court in New India Insurance Co. Ltd. v. Shanti Misra : [1976]2SCR266 , stated at page 240 (at p. 457 of 47 Comp Cas):
'On a plain language of Sections 110A and 110F, there should be no difficulty in taking the view that the change in law was merely a change of forum, i.e., a change of adjectival or procedural law and not of substantive law. It is a well-established proposition that such a change of law operates retrospectively and the person has to go to the new forum even if his cause of action or right of action accrued prior to the change of forum. He will have a vested right of action but not a vested right of forum.'
As noticed earlier in this judgment, Section 271(1) of the Income-tax Act confers jurisdiction on the Income-tax Officer to impose penalty on satisfaction of the conditions mentioned in Sub-clauses (a), (b) or (c). Section 274(2) of the Act had invested the Inspecting Assistant Commissioner with the power of the Income-tax Officer to impose penalty in cases mentioned therein. The jurisdiction of the Inspecting Assistant Commissioner under Section 274(2) was only that of the Income-tax Officer under Section 271(1) of the Act. By deletion of Sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1975, the Inspecting Assistant Commissioner is divested of the jurisdiction of the Income-tax Officer under Section 271(1) of the Act and on such divestiture, the Inspecting Assistant Commissioner ceased to have jurisdiction to proceed under Section 271 of the Act. After the amendment that came into force on April 1, 1976, the authorities competent to impose penalty are those mentioned in Section 271 of the Act. The change of forum is a matter of procedure and the Amendment Act is retrospective in regard also to matters pending before the Inspecting Assistant Commissioner.
8. For the aforesaid reasons, we answer the question referred in the negative, that is, against the Revenue and in favour of the assessee. The parties will suffer their respective costs.
9. A copy of this judgment under the seal of this court and the signature of the Registrar will be forwarded to the Tribunal as required by the law.