1. Penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 — reference to Inspecting Assistant Commissioner made prior to amendment of Section 274(2). (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 )
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1992 Supreme(SC) 847
SUPREME COURT OF INDIA
A.S.Anand : Yogeshwar Dayal
Commissioner Of Income Tax, Orissa
Versus
Dhadi Sahu
Case No. : 1788-89 of 1977
Date of Decision : 11/18/92
Advocates Appeared: Rajappa S. : Ramamurthi J. : Rao C.S.S. : Subhashini A.
Advocates:
A.Subhashini, C.S.S.RAO, J.RAMAMURTHY, S.RAJAPPA
A.Subhashini, C.S.S.RAO, J.RAMAMURTHY, S.RAJAPPA
A law changing the forum of proceedings does not affect pending actions unless a contrary intention is clearly shown. Jurisdiction validly acquired at the initiation of proceedings is a vested right that continues despite subsequent amendments, unless the legislature expressly provides otherwise.
Headnote:(A) Income Tax Act, 1961 - Sections 271(1)(c) and 274(2) - Taxation Laws (Amendment) Act, 1970 - General Clauses Act, 1897 - Section 6(b) - Penalty proceedings - Jurisdiction of Inspecting Assistant Commissioner - Amendment changing the criteria for reference - Whether pending references are affected by change in forum - General principle that a law bringing about a change in forum does not affect pending actions unless intention to the contrary is clearly shown (Para 18) - Jurisdiction conferred by virtue of a valid reference continues despite subsequent amendment unless the legislature expressly or by necessary implication indicates otherwise (Para 21).
(B) Vested right in forum - The forum of appeal or proceedings is a vested right as opposed to pure procedure; this right becomes vested when proceedings are initiated in the tribunal or court of first instance and continues in spite of the change of jurisdiction of different tribunals or forums unless expressly indicated otherwise (Para 21).
Facts of the case:
Penalty proceedings were initiated under Section 271(1)(c) of the Income Tax Act, 1961. Under the law prevailing at the time of reference, cases where the minimum penalty imposable exceeded Rs. 1,000 were referred to the Inspecting Assistant Commissioner. The case was referred before April 1, 1971. Subsequently, an amendment changed the criteria for reference to cases where the amount of concealed income exceeded Rs. 25,000. In the present case, the concealed income did not exceed Rs. 25,000, but the penalty order was passed by the Inspecting Assistant Commissioner after the amendment came into force.
Findings of Court:
The Inspecting Assistant Commissioner, to whom the case was referred prior to April 1, 1971, had the jurisdiction to impose the penalty despite the subsequent amendment.
Issues: Whether the Inspecting Assistant Commissioner, to whom a case was referred prior to the amendment of Section 274(2) of the Income Tax Act, 1961, retained jurisdiction to impose a penalty if the case did not satisfy the revised criteria under the amended section.
Ratio Decidendi: A change in the law regarding the forum of proceedings does not divest a tribunal of jurisdiction over pending actions unless the statute expressly provides for the transfer or abatement of such proceedings. Since the amending Act contained no provision to return pending references, and in light of Section 6(b) of the General Clauses Act, 1897, the jurisdiction validly acquired at the time of reference remained intact.
Result: Appeals succeed and the order of the High Court is set aside.
Legal Category Hierarchy
Table of Contents
2. Whether an amendment to Section 274(2) divests the Inspecting Assistant Commissioner of jurisdiction over penalty references validly initiated before the amendment's effective date. (Para 16 , 17 )
3. Change in forum does not affect pending actions absent contrary intention; Section 6(b) of the General Clauses Act preserves the operation of previous laws. (Para 18 , 19 , 20 , 21 , 25 , 26 )
4. A validly initiated reference to a forum remains competent despite subsequent legislative changes in jurisdictional criteria, unless the statute expressly provides for the transfer of pending proceedings. (Para 20 , 21 )
5. Appeals allowed and the High Court order set aside; Inspecting Assistant Commissioner held to have jurisdiction to impose penalty. (Para 27 , 28 )
6. Does a law changing the forum of proceedings affect actions already pending?
Generally, a law bringing about a change in forum does not affect pending actions unless a contrary intention is clearly shown, such as through a specific provision for the change-over of proceedings from one tribunal to another. (Para 18 , 21 , 25 )
7. How does the General Clauses Act affect the jurisdiction of an officer after a statutory amendment?
Under Section 6(b) of the General Clauses Act, 1897, the previous operation of a section and anything duly done thereunder continues to have effect, enabling an officer to pass orders in references validly initiated before the amendment. (Para 20 , 25 )
8. Is the right to a specific forum of proceedings considered a vested right?
While litigants have no vested right in pure procedural law, the forum of appeal or proceedings is a vested right once initiated, which continues unless the legislature expressly indicates otherwise by words or necessary implication. (Para 21 )
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 Taxation La
