COMMISSIONER OF INCOME TAX, BANGALOREversusSMT. R. SHARADAMMA

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.A             COMMISSIONER OF INCOME TAX, BANGALORE
                                  v.
                        SMT. R. SHARADAMl\1A

                                      APRIL 3, 1996

B                [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.

           Commissioner of Income Tax v. Dhadi Sahu, 199 ITR 610,
     Manujendra Dutt v. Purendu Prosad Roy Chowdhury, AIR (1967) SC 1419,
     relied on.
F
             R. Abdul Azeez v. Commissioner of Income Tax, Kamataka, 128 ffR
     547, disapproved.

             CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3169 of
     1984.
G
          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.

H            S:_:irinivasan for the Respondent.
                                          1200
\

                           C.LT. v. R. SHARADAMMA                          _ 1201 '

          The following Order of the Court was delivered :                            A
         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 :
                                                                                      B
            'Whether. on the facts and in the circumstances 3of the case, the .
            l.TA.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
            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 :                        '                 -· .

            '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
    1202                      SUPREME COURT REPORTS              [1996] 3 S.C.R.

A           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-
B   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,
c           (i) of Section 271, if in a case falling under clause (c) of that
            sub-section, the amount of income (as detenni11ed by the I11come-
            tax Officer '?n assessme11t) in respect of which the particulars have
            been concealed or inaccurate pa1ticulars have bem furnished exceeds
            a sum of twe11ty five thousa11d 1Upees, the Income-tax Officer shall
            refer the c~se to the Inspecting Assistant Commissioner, who shall,
D
            for the purpose, have all the powers conferred under this Chapter
            for the imposition of penalty."

                        "
    (The words underlined by us were substituted for the words "the minimum
    penalty imposable :exceeds a sum of Rupees one thousand".)                          '
E
                       ·~
          On February 15, 1975, the Inspecting Assistant Commissioner passed
    orders imposing penalties for both the said assessment years.
                      ',
                      " I
           The assessce ,filed appeals before the Tribunal contending that by
F   vi1tue of the amendment effect by Taxation Laws (Amendment) Act, 1970,
                      ...
    the Inspecting Assistant Commissioner lost jurisdiction to proceed with the
    said penalty proce~dings with effect from April 1, 1971 inasmuch as in the
    said cases, the amount of income in respect of which the particulars have
    been concealed, was less than Rupees twenty five thousand, within the
    meaning of sub-section (2) of Section 274 as amended in 1970 with effect
G   from April 1, 197i:' The contention was that penalty proceedings cannot
    continue before the .Inspecting Assistant Commissioner because the essen-
    tial requirement of amended sub-section (2) was not satisfied. The Tribunal
    accepted the said ,plea and allowed the appeal. At the instance of the          •
    Revenue, the Tribunal stated the following question for the opinion of the
H   Orissa High Court ·Under Section 256(1) of the Act :
                         C.l.T. v. R. SHARADAMMA                           1203

          "Whether, on the facts and circumstances of the case and on a true A
          interpretation of section 274, as amended by the Taxation Laws
          (Amendment) Act, 1970 the Inspecting Assistant Commissioner to
          whom the case was referred prior to April 1, 1971, had jurisdiction
          to impose penalty."

        The High Court answered the question in favour of the assessee             B
  whereupon the matter was brought to this Court. This Court at the outset
  stated the general principle applicable in this behalf in the following words:

           "It may be stated at the outset the general principle is that a law
           which brings about a change in the forum does not affect pending C
           actions unless an intention to the contrary is clearly shown. 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."
                                                                                   D
        The Court then observed that once a reference was validly made to
  the Inspecting Assistant Commissioner he did not lose the jurisdiction to
  deal with the matter on account of the aforesaid Amendment Act. lt
  pointed out that the Amending Act does not does not contain any provision
  that the references validly pending before the Inspecting Assistant Com-
  missioner should be returned without passing any final order if the amount
                                                                                   E
  of income in respect of which the particulars have been concealed did not
  exceed Rupees twenty five thousand. The said circumstance, it held, sup-
  ported the inference drawn by the Court that the Inspecting Assistant
  Commissioner continued to have jurisdiction to impose penalty. The Court
• observed :                                                                       F
           "It is also true that no litigant has any vested right in the matter of
           procedural law but, where the question is of change of forum, it
           ceases·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 G
           when the proceedings are initiated in the Tribunal or the· court of
           first instance and, unless the Legislature has, by express words or
           by necessary implication, clearly so indicated, that vested right will
           continue inspite of the r 'iange of jurisdiction of the different
           Tribunals or forums."                                                   H
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                                                                                    '
                                                                                        '




    1204                  SUPREME COURT REPORTS                   [1996] 3 S.C.R.

A         This Court pointed out that the view taken by it is alw the view taken
    by Gujarat, Patna, Punjab and Haryana, Bombay, Calcutta and Madhya
    Pradesh High Courts, whereas Allahabad and Karnataka High Courts had
    taken a contrary view. The Court disapproved the contrary view taken by
    the Allahabad and Karnataka High Courts and approved the view taken
B   by the other High Courts.

           In our opinion, the principle underlying the said decision is squarely
    applicable herein. In this case also, a reference was made to the Inspecting
    Assistant Commissioner in accordance with the law in force on the date of
    reference. Once the Inspecting Assistant Commissioner was thus seized of
C   the matter, he did not lose seizin thereof on account of the deletion of
    sub-section (2) of Section 274. This is also the principle underlying Section
    6 of the General Clauses Act.

           We may also mention that in Dhadi Sahu, this Court referred inter
    alia to the earlier decision of this Court in Mamtjendra Dutt v. Pure11du
D   Prasad Roy Chowdluuy, AIR (1967) SC 1419 which too was a case of
    deletion of Section 29 of the Calcutta Thika Tenancy Act, 1949 by the
    Amendment Act of 1953. It was held by this Court that by virtue of the
    said deletion, the Controller, before whom the proceeding was pending,
    was not deprived of the jurisdiction to try the matter pending before him
E   on the date of coming into force of the Amending Act.

          We are, therefore, of the view that the Inspecting Assistant Commis-
    sioner did not lose the jurisdiction to continue with the proceedings
    pending before him on March 31, 1976 by virtue of the deletion of sub-sec-
    tion (2) of Seclion 274 by the Taxation Laws (Amendment) Act, 1970 with
F   effect from April 1, 1976. He was entitled to continue with those proceed-
    ings and pass appropriate orders according to law.

          Accordingly, we allow this appeal and answer the question aforemen-
    tioned in the negative, i.e., in favour of the Revenue and against the
G   assessee. There shall be no order as to costs.

    R.P.                                                       Appeal allowed.