The determining factor for deciding the Inspecting Assistant Commissioner's jurisdiction to impose penalty is the date of reference by the Income-tax Officer to the Inspecting Assistant Commissioner.

1. This reference under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue is to answer the following question of law :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty order passed under section 271 (1)(c) of the Income-tax Act, 1961, holding that the Inspecting Assistant Commissioner of Income-tax had no jurisdiction to levy the said penalty on May 25, 1978 ?"

2. The relevant assessment year is 1973-74. The assessment was completed by the Income-tax Officer on a total income of Rs. 80,070 on March 30, 1976, by making an addition of Rs. 10,000 in the trading profit and of Rs. 15,500 as income from undisclosed sources. The Income-tax Officer also initiated penalty proceedings under section 27 l(1)(c) of the Act. Thereafter, the Income-tax Officer referred the penalty proceedings to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner imposed penalty of Rs. 16,000 by his order dated May 25, 1978. The Tribunal set aside the penalty holding that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty by an order passed after the deletion of sub-section (2) of section 274 of the Act w.e.f. April 1, 1976. Hence, this reference at the instance of the Revenue.

3. As already held by us in several matters following the decision in CIT v. Shri Ram Prakash Saraf (1986) 160 ITR 860 (MP) , the determining factor for deciding the Inspecting Assistant Commissioner's jurisdiction to impose penalty is the date of reference by the Income-tax Officer to the Inspecting Assistant Commissioner. In case such a reference was made by the Income-tax Officer prior to April 1, 1976, the Inspecting Assistant Commissioner has jurisdiction to decide that reference and impose penalty, but not if the reference itself was made by the Income-tax Officer subsequent to April 1, 1976, even though the penalty proceedings may have been initiated by the Income-tax Officer prior to April 1, 1976. The question of the Inspecting Assistant Commissioner's jurisdiction in the present case also has to be decided on this basis. This has not been done by the Tribunal. The Tribunal has, therefore, to decide the matter afresh on this basis.

4. Consequently, the reference is answered in favour of the Revenue by holding that the Tribunal was not justified in deciding the question of the Inspecting Assistant Commissioner's jurisdiction to impose penalty except on the basis of the date on which the reference was made by the Income-tax Officer to the Inspecting Assistant Commissioner. The Tribunal shall, therefore, decide the matter afresh on the basis indicated.

5. No costs.

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