C.S.P. Singh, J.

1. At the instance of the Commissioner of Income-tax, the Tribunal has referred the following question for our opinion:

"Whether, on the facts and in the circumstances of the case, was the Tribunal right in holding that, the Inspecting Assistant Commissioner of Income-tax had no jurisdiction to pass order of penalty in respect of the assessment year 1969-70?"

2. The assessee carries on retail business at Delhi in woollen goods. For the assessment year 1969-70, it filed a return showing a loss of Rs. 28,170. The assessment was, however, computed on a total income of Rs. 27,860. On appeal, the total income computed by the ITO was sustained and a loss of Rs. 14,313 was determined by the AAC. While computing the assessment, the ITO initiated proceedings under Section 271(1)(c) of the I.T. Act, and referred the matter to the IAC under Section 274 of the Act. The IAC held that the provisions of Section 271(1)(c) were attracted, and imposed a penalty of Rs. 15,000 by his order dated November 29, 1971. An appeal was preferred by the assessee before the Tribunal. The Tribunal held that as Section 274(2) of the I.T. Act had been amended, with effect from April 1, 1971, by the Taxation Laws (Amendment) Act of 1970, the IAC did not have jurisdiction to impose penalty. It is not disputed that at the time when the reference was made by the ITO to the IAC, it was valid under the law as it then stood. The amending Act which has been referred to earlier, amended Section 274(2) and in its place substituted the following :

"274. (2) Notwithstanding any thing contained in Clause (iii) of Sub-section (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 Chapter for the imposition of penalty."

As a result of this amendment, such cases where the concealment or inaccurate particulars furnished exceeded Rs. 25,000 had to be referred to the IAC. Cases where concealment of the amount is less than this figure had to be dealt with by the ITO, There is divergence of opinion between the High Courts as to whether in cases like the present, the ITO or the IAC has jurisdiction to impose penalty. The Orissa High Court in CIT v. Dhadi Sahu [1976] 105 ITR 56 and in the case of Radheyshyam Agarwalla v. CIT [1978] 113 ITR 196 has held that the Amendment Act took away the jurisdiction of the IAC as from April 1, 1971, in respect of cases where the amount involved was less than Rs. 25,000. The Gujarat High Court in the case of CIT v. Royal Motor Car Co. [1977] 307 ITR 753 and in the case of CIT v. R. Ochhavlal and Co. [1976] 105 ITR 518, has taken the view that the amendment did not affect the jurisdiction of the IAC to complete penalty proceedings, where a valid reference had been made to him by the ITO. The Andhra Pradesh High Court in the case of Addl. CIT v. Watan Mechanical and Turning Works [1977] 107 ITR 743 [FB], held that the enlarged period of limitation contained in the amendment to Section 275 of the Act with effect from April 1, 1971, applied to cases of penalty where the time for imposing the penalty had not expired. The view was based on the principle that no party had a vested right in procedure and limitation. The Madras High Court in the case of Continental Commercial Corporation v. ITO [1975] 100 ITR 170 has taken the view that the amendment to Section 274(2) did not apply to cases where the return was filed before the amendment came into force, i.e., it was not retrospective. This view is based on the principle that the relevant law applicable to cases of infringement of a statute or an offence is the law prevailing on the day wh