ORDER

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 :

"Whether on the facts and in the circumstances of the case, the I.T.A.T. is right in law in cancelling the penalty levied by the Inspecting Assistant Commissioner under Section 271(1)(c) holding that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under Section 271(1)(c) in view of changed provisions of law ?"

2. The assessment year concerned herein is 1972-73.

The High Court followed its earlier decision in R. Abdul Azeez v. Commissioner of Income Tax, Karnataka1, and has answered 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 Section 274 by the Taxation Laws (Amendment) Act, 1975 with effect from April 1, 1976, the penalty proceedings pending before the Inspecting Assistant Commissioner on March 31, 1976 cannot continue before him thereafter and that he has no jurisdiction to con