JUDGMENT

YOGESHWAR DAYAL, J.

(1) THESE are two appeals in view of the special leave granted by this court by order dated 4/08/1977 against the judgment and order dated 5/12/1975 of the orissa High court in C.J.C. Nos. 176 and 177 of 1974 rendered in its advisory jurisdiction on a consolidated case stated by the Income Tax Appellate tribunal, Cuttack bench on a question of law arising out of the tribunals consolidated appellate order dated 19/12/1973 in I.T.A. Nos. 153 and 154 (Cuttack) of 1973-74.

(2) THE facts giving rise to these appeals, briefly stated, are as follows: The respondent (hereinafter referred to as the assessee) is an individual and the proceedings relate to the imposition of penalty under Section 271(l)(c) read with Section 274(2 of the Income Tax Act, 1961 (hereinafter referred to as the Act) for the assessment years 1968-69 and 1969-70 for those two years the assessee had disclosed in his return only his own share of the profits of a firm of which he was a partner but failed to disclose the income falling to the share of the minor children from house property which ostensibly stood in the name of his wife but really belonged to the assessee, the wife being only a benami. The incomes returned and assessed were as follows: Assessment year Income returned Income assessed

1968-69 Rs.9,940.00 Rs.30,840.00

1969-70 Rs.7,020.00 Rs.14,472.00

(3) THE assessment orders were passed on 28/02/1970. The Income Tax Officer initiated proceedings for the imposition of penalty under Section 271(l)(c) of the Act and the matter was referred to the Inspecting Assistant Commissioner under Section 274(2 of the Act.

(4) ON 28/02/1970 i.e. on the date of the assessment orders, Section 274(2 of the Act provided as follows:

"NOTWITHSTANDING anything contained in clause (iii) of Ss. (1) of Section 271 if in a case falling under clause (c) of that Ss. 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 Ch. for the imposition of penalty."

(5) PENDING reference of the case before the Inspecting Assistant Commissioner, Section 274(2 of the Act was amended with effect from April I, 1971 by the Taxation Laws (Amendment) Act, 1970 (hereinafter referred to as a the Amending Act) so as to read as follows:

"NOTWITHSTANDING anything contained in clause (iii) of Ss. (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 Ch. for the imposition of penalty."

(6) THE fact of concealment as found in the assessment orders was not disputed in the penalty proceedings.

(7) THEREAFTER on 15/02/1973, the Inspecting Assistant Commissioner passed orders imposing penalties of Rs. 24,000.00 and Rs. 12,500.00 respectively for the assessment years 1968-69 and 1969-70.

(8) THE assessee preferred appeals to the Income Tax Appellate tribunal and the tribunal by its consolidated order dated 19/12/1973 allowed the assessees appeals and cancelled the penalties holding that in view of the amendment made to Section 274(2 of the Act with effect from 1/04/1971, the Inspecting Assistant Commissioner had lost his jurisdiction.

(9) ON the Revenues application, the Appellate tribunal stated the consolidated case to the orissa High court under Section 256(1 of the Act and referred the following question of law:

WHETHER, on the facts and circumstances of the case, and on a true interpretation of Section 274, as amended by the