Raina, J.

1. This is a reference under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as " the Act").

2. The following question has been referred to this court by the Income Tax Appellate Tribunal for decision:

" Whether, on the facts and the circumstances of the case, the Tribunal was justified in holding that in respect of the assessment years 1961-62 and 1962-63, the quantum of penalty would have to be regulated with reference to the provisions of Section 271(1)(c) before its amendment on April 1, 1968, and as the minimum penalty under Section 271(1)(c) fell below Rs. 1,000 only the Income Tax Officer has jurisdiction to proceed with the penalty proceedings ? "

3. The material facts leading to this reference as stated by the Tribunal are as follows : The assessee, Ramchand Kundanlal Saraf of Bina, is the karta of a Hindu undivided family and the dispute relates to the period 1961-62 and 1962-63. In the original returns submitted by the assessee, he had shown income from house properties in respect of two houses only, After the completion of the original assessment proceedings, the assessment was reopened and notices for reassessment under Section 148 of the Act were served on the assessee and, in response thereto, the assessee filed revised returns. During the course of the reassessment proceedings the Income Tax Officer made certain additions to the income of the house properties, which had been omitted from the original returns filed by the assessee. The orders of reassessment for each of these two years are annexures " A-1 " and " A-2" dated 27th September, 1968.

4. As the Income Tax Officer was satisfied that the assessee had committed concealment of income under Section 271(1)(c) of the Act, he issued notices to the assessee asking him to show cause, why penalty under the aforesaid section should not be imposed. Since according to the Income-tax Officer, the minimum penalty which could be imposed under the Act exceeded Rs. 1,000 he referred the matter to the Inspecting Assistant Commissioner, who after giving the assessee due opportunity of being heard, came to the conclusion that the assessee was guilty of concealment and he, therefore, imposed a penalty of Rs. 5,020 in respect of the assessment year 1961-62 and Rs. 7,020 in respect of the assessment year 1962-63, vide orders (annexures " B-1 " and " B-2 "). Against these two orders, the assessee preferred an appeal before the Tribunal. His main contention, inter alia, was that the amendment of Section 271 of the Act, which had come into force with effect from April 1, 1968, and which specifies that the amount of penalty shall not be less than the amount of concealed income, would not be applicable to this case as it could not be given retrospective operation. Thus, according to him, the penalty, if any, must be computed in accordance with the provisions of Section 271 of the Act as it stood before the amendment. It was further contended that as the minimum penalty under Section 271(1)(c) as it stood before the amendment fell below Rs. 1,000, the Income Tax Officer had jurisdiction to proceed with the penalty proceedings. These contentions were upheld by the Tribunal. It, accordingly, set aside the orders of the Assistant Commissioner in respect of these years and directed that the matter shall go back to the Income Tax Officer for fresh decision according to law. The department, being aggrieved by this decision of the Tribunal, moved the Tribunal for a reference of the question referred to above, and it has been referred accordingly.

5. Before we proceed to deal with this reference, it would be pertinent to take note of the amendment of Section 271 of the Act, which came into effect from April 1, 1968. We are primarily concerned with the amendment in Sub-clause (iii) of Section 271(1)(c) and the relevant part of the section as it stood before and after the amendment is reproduced below :

Before amendment

"271. Failure to furnish returns,