The amendment to Section 274(2) of the Income Tax Act, 1961, was prospective and not retrospective, and therefore, the Inspecting Assistant Commissioner had no jurisdiction to levy the penalty in the present case as the concealed income was below Rs. 25,000.

B.S.Dhillon, J.

1. The original assessment of the assessee for the assessment year 1965-66 was completed on a total income of Rs. 25,592. Later on, it came to light that there were two cash credits to the tune of Rs. 15,000. The assessment was, therefore, reopened tinder Section 147 of the I.T. Act, 1961 (hereinafter referred to as "the Act"). The assessee surrendered the cash credit of Rs. 15,000 and, consequently, the assessment was refrained on 20th February, 1971, on a total income of Rs. 49,592. Later on, the assessment order was rectified and the income was reduced to Rs. 40,592.

2. For concealing its income, penalty proceedings were initiated against the assessee by an order of the ITO on 20th February, 1971. Since the minimum penalty imposable exceeded Rs. 1,000, the ITO referred the case to the IAC on 29th December, 1972, under Section 274(2) of the Act. The IAC, vide his order dated 15th March, 1973, levied a penalty of Rs. 10,000 on the assessee under Section 271(1)(c) of the Act.

3. Aggrieved by the Order of the IAC, the assessee preferred an appeal before the Income-tax Appellate Tribunal, Amritsar (hereinafter referred to as " the Tribunal "). The Tribunal accepted the appeal. The provisions of Section 274(2) of the Act were amended by the T.L. (Amend.) Act, 1970, with effect from 1st April, 1971, and it was provided that the IAC could have jurisdiction to levy the penalty only if the concealed income exceeded Rs. 25,000. The Tribunal accepted the contention of the assessee that since, in the present case, the concealed income of the assessee was below Rs. 25,000, the ITO and not the IAC had the jurisdiction to levy penalty on the assessee. The Tribunal further observed that even though the assessment order was passed on 20th February, 1971, the reference under Section 274(2) was made by the ITO to the IAC only on 29th December, 1972, when Section 274(2) stood amended with effect from 1st April, 1971. The Tribunal held that on 29th December, 1972, when the case was referred by the ITO to the IAC, on that date the IAC, in view of the amendment, had no jurisdiction to pass the order levying penalty. The order levying penalty was thus set aside by the Tribunal.

4. On the application made by the revenue, the following questions of law have been referred by the Tribunal to this court for its opinion :

" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the provisions of Section 271(1)(c) read with section 274(2) as amended with effect from 1st April, 1971, by the Taxation Laws (Amendment) Act, 1970, were applicable to this case ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Inspecting Assistant Commissioner had no jurisdiction to impose the penalty in this case ? "

5. As is clear, the primary question of law which arises for determination in this case as to what is the effect of the amendment of Section 274(2) of the Act or, in other words, is the amendment retrospective ? The matter is res Integra. A Division Bench of this court in CIT v. Raman Industries [1980] 121 ITR 405 considered this question at length and came to the conclusion that there is no provision in the T.L. (Amend.) Act, 1970, to indicate that the amendment of Section 274 of the Act is retrospective. It was held that the section deals with vested rights and, therefore, the amendment is prospective in operation. We are entirely in agreement with the view taken in this case. It is well settled that a statute dealing with procedure is retrospective and its provisions also apply to the proceedings pending at the time of its enactment, but where the provisions of the statute affect vested rights the said provisions are prospective in operation unless there is an indication in the statute to the contrary. The jurisdiction of a Tribunal to try a case is a vested right and has to be determined according to law in force