The jurisdiction of the IAC to impose penalty in a case where reference was made prior to the amendment of Sec.274(2) and Sec.275 of the Act and the concealed income is less than Rs. 25,000.

Nazir Ahmad, J.

1. A statement of the case under Sec.256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), has been submitted by the Income-tax Appellate Tribunal, "A" Bench, Patna, referring the following question of law for the opinion of this court:

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the order of the Inspecting Assistant Commissioner suffered from a legal infirmity in view of the amended provisions of Sections 274 and 275 of the Income-tax Act, 1961 ?"

2. The relevant facts of the case may be culled out from the statement of the case. The assessee is a firm and the assessment year involved is 1966-67. In the course of the assessment proceedings, the ITO noticed cash credits aggregating to Rs. 23,500 in the names of different persons in the books of accounts of the assessee. In the absence of satisfactory evidence as to the sources of the credits, the ITO included this amount as unexplained income of the assessee and initiated proceedings under Sec.271(l)(c) of the Act. Since the minimum penalty imposable in this case exceeded Rs. 1000, the ITO referred the matter to the IAC.

3. Before the IAC, it was submitted on behalf of the assessee that there was no finding in the order of the assessment that the assessee had deliberately or fraudulently furnished inaccurate particulars of its income or has concealed its income. It was also submitted that the penalty proceedings being quasi-criminal in nature, it was for the Department to prove that the assessee had concealed its income or had furnished inaccurate particulars of such income. It was also submitted that the mere fact that certain explanations of the assessee were not acceptable would not be sufficient to hold that that the assessee had concealed its income.

4. The IAC considered the submissions made before him and also considered the fact that the alleged persons in whose names the credits appeared were in the employment of the assessee-firm and that all the credits appeared in the assessees books on the same day, i.e., March 30, 1966, which was towards the close of the accounting year of the assessee. He, therefore, came to the conclusion that the credits were the concealed income of the assessee. The IAC also considered the fact that the assessees returned income was less than 80% of the finally assessed income. He, therefore, imposed a penalty of Rs. 4,265 rejecting the assessees objection that he had forfeited his jurisdiction to impose penalty in this case, after the amendment of Sections 274 and 275 of Act. A copy of the order of the IAC has been annexed and marked as annexure A forming part of the statement of the case.

5. The assessee appealed before the Tribunal. None was present on behalf of the assessee at the time of hearing of the appeal. The Tribunal, therefore, disposed of the appeal on the basis of the argument of the departmental representative and the facts on record. Before the Tribunal, it was submitted on behalf of the Department that the inclusion of the cash credits appearing in the assessees books of account as unexplained income of the assessee was even confirmed by the AAC in appeal, because the assessee could not produce any satisfactory evidence as to the source of the deposits appearing in its books of account. It was further submitted that after amendment of Sec.275 of the Act, the IAC could pass penalty order in this case at any time up to March 31, 1973.

6. The Tribunal after considering the facts of the case found that the assessment in this case was completed by the ITO on May 30, 1970, but the penalty was imposed by the IAC on January 3, 1973, when Sec.274(2) and 275 of the Act were amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. The Tribunal came to the conclusion that if Sec.275 had not been amended with effect from April 1, 1971, the penalty proceedings in this case should have been completed on or befor