JUDGMENT The Court : This is an application by a dissolved partnership firm At the relevant time the firm was registered under the Indian Partnership Act as well as under the Income Tax Act. Assessment for the assessment year1962-63 under the Income Tax Act 1961 was made on the said firm on 31st March, 1967. In the assessment order the income Tax officer has recorded that the assessee was guilty of furnished incorrect particulars and/or concealment of income, and in the premises the officer was satisfied prior to the completion of the assessment that the assessee was so guilty and proceeding for penalty should be taken. Accordingly, on 22nd March, 1967 the Income Tax officer, who in this case was the Income Tax officer “A” Ward, District III(3), Calcutta, issued a notice to the assessee that whereas it appeared to him that the assessee had concealed the particulars of his income or deliberately furnished incorrect particulars of such income he was referring the penalty proceeding to the Inspecting Assistant Commissioner Range IV, Calcutta according to sub-Section (2) of section 274 of the Income Tax Act. 1961. The assessee was further informed that further proceedings with regard to the levy of the Penalty informed that further proceeding with regard to the levy of the penalty would take place before the said Inspecting Assistant Commissioner of Income Tax as provided under sub-section (2) of section 274 of the said Act. On the 29th July, 1967 there was an order of transfer passed by the Commissioner of Income Tax West Bengal-I under section 127 of the Income Tax Act 1961. It would be relevant to refer to the said order which is as follows :- “In exercise of the power conferred by sub-section (1) of Section 127 of the Income Tax Act, 1961 (43 of 1961) and of all other power enabling him in the behalf, the Commissioner of Income-tax West Bengal-I, herby transfers the case, the particulars of which are mentioned in column 3 of the Schedule hereto annexed, from the Income-tax officer mentioned in Column 4 to the Income-tax Officer mentioned in Column 5 thereof SCHEDULE Sl.No. G.I.R. No. Name of the Assessee From Income Tax Officer To Income Tax Officer 1. III(3)/145-J/A. M/s Jaswantrai & Bros. ITO A-Wd., Dist III (3) Cal. ITO., C-Wd., Hundi Circle Calcutta. 2. “/303-a/A. Sri Jaswantrai Agarwalla. -do- -do- 3. “/304-a/A. Sri Prabhu Dayal Agarwalla. III(3)/145-J/A. M/s Jaswantrai & Bros. ITO A-Wd., Dist III (3) Cal. ITO., C-Wd., Hundi Circle Calcutta. 2. “/303-a/A. Sri Jaswantrai Agarwalla. -do- -do- 3. “/304-a/A. Sri Prabhu Dayal Agarwalla. -do- -do- 4. “/305-a/A. Sri Kashiram Agarwalla. -do- -do- 5. “/306-a/A. Sri Badriprasad Agarwalla. -do- -do- 6. “/307-a/A. Sri Chogganmall Agarwalla. -do- -do- This order shall take effect from the 2nd August, 1967. K.E. Johnson Commissioner of Income tax, West Bengal-1 Dated, the 31/7/1967. Memo No. A/16055-59/C.T. 2P/9/66-67 2. Item No.1 referred to the said order related to the petitioner-firm. On the 21st January. 1969, the petitioner received a notice from the Inspecting Assistant Commissioner, Range V wherein. it was stated that the Income Tax Officer 'C' Ward, Hundi Circle had referred under sub-section (2) of section 274 of the Income Tax Act, 1961 the penalty-case of the petitioner under clause (c) of sub-section (1) of section 271 for the assessment year 1962-63. The assessee was required to appear before the said Inspecting Assistant Commissioner to show cause why penalty should not be imposed. In this application under; Article 226 of the Constitution the petitioner challenges the propriety and the validity of the penalty proceedings. 3. Various grounds have been raised in support of this petition. One of the points urged in support of this petition was that the Inspecting Assistant Commissioner had to be satisfied in course of the proceedings for assissant and as he was not so satisfied the penalty proceedings were invalid and irregular. In view of the judgment of the Special Bench of this Court in the Matter No. 137 of 1969 (Mahabir Prasad Poddar v. The Income-Tax Officer, this contention of the assessee must be rejected. The assessee has also raised several points regarding the propriety of the penalty proceedings on the ground that the assessee was not guilty of any concealment of income or of furnishing incorrect particulars of income. I am of opinion that in this application the assessee is not entitled to agitate the said grounds as it would be open for the assessee to raise these contentions before the appropriate authorities. I need not, therefore, express any opinion on the merits of these contentions. I am of opinion that in this application the assessee is not entitled to agitate the said grounds as it would be open for the assessee to raise these contentions before the appropriate authorities. I need not, therefore, express any opinion on the merits of these contentions. It was also stated in the petition that the books of account and documents of the assessee had been all seized and in the absence of such books and documents it was not possible for the assessee to put up its defence but no contention in support of this ground was urged before me in this application. Therefore it is not necessary for me to decide this contention either. 4. The only contention that was seriously urged in this application was that after the case had been referred by the Income Tax Officer "A" Ward Dist. III (3) Calcutta to the Inspecting Assistant Commissioner. Range IV, the notice by the Inspecting Assistant Commissioner Range V dated 21st January, 1969 was without jurisdiction. It was contended that Income tax Officer 'C' Ward, Hundi Circle, who it was stated in the said notice of the Inspecting Assistant Commissioner dated 21st January, 1969 had referred the matter to him, had no jurisdiction to refer the matter to the said Inspecting Assistant Commissioner and could not have, in the facts and circumstances of the case, referred the matter to such Inspecting Assistant Commissioner. It was contended that after the reference had been made by the Income-tax officer 'A' Ward, Dist III (3), Calcutta to the Inspecting Assistant Commissioner, Range IV, the case was pending before the Inspecting Assistant Commissioner, Range IV and there was no transfer of any case from the Inspecting Assistant Commissioner, Range IV to any other Inspecting Assistant Commissioner by any valid order. In order to appreciate this contention it will be necessary to refer to the relevant statutory provisions. The question of imposition of penalty is dealt in Chapter XXI of the Income-tax Act, 1961. These are mainly contained in sections 270 to 274 of the said Chapter. Section 270 provides for the contingency of failure to furnish information regarding securities. In order to appreciate this contention it will be necessary to refer to the relevant statutory provisions. The question of imposition of penalty is dealt in Chapter XXI of the Income-tax Act, 1961. These are mainly contained in sections 270 to 274 of the said Chapter. Section 270 provides for the contingency of failure to furnish information regarding securities. Section 271 provides that if the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under the said Act was satisfied, and in the facts of this case we are concerned with clause (c) of sub-section (1) of section 271 which deals, with, concealment of the particulars of income or furnishing incorrect particulars of such income, then in such cases the Income-Tax Officer is authorised in terms of such section to impose certain penalties mentioned therein. It is not also necessary in the facts and circumstances of this case to deal with section 272 and 273 of the said Act. It would be necessary to refer, however, to section 274 which provides as follows :"274. Procedure.-(l) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard. (2) Notwithstanding anything contained in clause (iii) of subsection (1) of section 271, if in a case falling under clause (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, 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. (3) An Appellate Assistant Commissioner, on making an order under this Chapter imposing a penalty, shall forthwith send a copy of the same to the Income-tax Officer." 5. Section 275 provides a period of limitation for completion of the penalty proceedings and it has stipulated that no order imposing a penalty under this Chapter should be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty had been commenced in this case, the assessment proceedings. Therefore the penalty proceedings have to be completed within two years from the assessment proceedings, that is to say within two years from 31st March, 1967. Therefore the penalty proceedings have to be completed within two years from the assessment proceedings, that is to say within two years from 31st March, 1967. There is also an explanation which provided for extending the period of limitation if the proceedings are stayed by any order of the Court. In this connection it will now be necessary to refer to certain other sections. Sections 120 to l30A deal with the jurisdiction of several authorities under the Act. Section 120 deals with jurisdiction of the Directors of Inspection; section 121 deals with jurisdiction of Commissioners; section 122 deals with jurisdiction of the Appellate Assistant Commissioners and section 123 deals with jurisdiction of the Inspecting Assistant Commissioners and it would be necessary to set out the said section which is as follows : "123. Jurisdiction of Inspecting Assistant Commissioners. (1) Inspecting Assistant Commissioners shall perform their functions in respect of such areas or of such persons or classes of persons or of such incomes or classes of income or of such cases or classes of cases as the Commissioner may direct. (2) Where any directions issued under sub-section (1) have assigned to two or more Inspecting Assistant Commissioners, the same area or the same persons or classes of persons Or the same incomes or classes of income or the same cases or classes of cases, they shall have concurrent jurisdiction and shall perform such functions in relation to the said area or persons or classes of persons or incomes or classes of income or cases or classe of cases as the Commissioner may, by general or special order in writing, specify, for the distribution and allocation of the work to be performed." 6. Section 124 similarly deals with jurisdiction of the Income-tax Officers which is, more or less, in the similar terms, so far as it is material for the present purpose. It deals with certain other situations to which it is not necessary of the purpose of this application to refer. Section 126 deals with the powers of the Board regarding specified area, classes of persons or incomes. Section 127 is material for the purpose of this application and it will be relevant to set out the said section which is as follows : "127. Section 126 deals with the powers of the Board regarding specified area, classes of persons or incomes. Section 127 is material for the purpose of this application and it will be relevant to set out the said section which is as follows : "127. Power to transfer cases.-(1) The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from any Income-tax Officer or Income tax Officers subordinate to him to any other Income-tax Officer or Income-tax Officers also subordinate to him and the Board may similarly transfer any case from any Income-tax Officer or Income-tax Officers to any other Income- tax officer or Income-tax Officers: 7. Provided that nothing in this sub-section shall be deemed to require any such opportunity to be given where the transfer is from any Income-tax Officer or Income-tax Officers to any other Income-tax Officer or Income-tax Officers and the offices of all such Income-tax Officers are situated in the same city, locality or place: 8. Provided further that where any case has been transferred from any Income-tax Officer or Income-tax Officers to two or more Income-tax Officers, the Income-tax Officers to whom the case is so transferred shall have concurrent jurisdiction over the case and shall perform such functions in relation to the said case as the Board or the Commissioner (or any Inspecting Assistant Commissioner authorised by the Commissioner in this behalf) may, by general or special order in writing, specify for the distribution and allocation of the work to be performed. (2) The transfer of a case under sub-section (1) may be made at any stage of the proceedings, and shall not render necessary the re-issue of -any notice already issued by the Income-tax Officer or Income-lax Officers from whom the case is transferred. Explanation - In this section and in sections 121, 123, 124 and 125. (2) The transfer of a case under sub-section (1) may be made at any stage of the proceedings, and shall not render necessary the re-issue of -any notice already issued by the Income-tax Officer or Income-lax Officers from whom the case is transferred. Explanation - In this section and in sections 121, 123, 124 and 125. the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date; and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." It is not necessary to refer to the other provisions of sections 128, 129. 130 and 131 of the Act. 9. The order of the Commissioner dated 29th July, 1967 has transferred the "case" of the assessee from the Income-Tax Officer 'A' Ward, Dist. III(3), Calcutta to the Income-tax Officer 'C' Ward, Hundi Circle, Calcutta. In view of the explanation provided in section 127, Counsel for the revenue contended that the penalty proceedings which were pending also stood transferred by the aforesaid process. It is true that the penalty proceedings would come within the expression, the "case" as mentioned in the Explanation given to section 127 of the Act. But the question is from the order of transfer can it be said that the penalty proceedings, which were pending at the relevant time of the transfer, have been transferred to the Inspecting Assistant Commissioner, Range V by the said order. The order of transfer, as mentioned herein before, is dated 29th July,1961, The reference to the Inspecting Assistant Commissioner, Range IV, had been made by the Income-tax Officer 'A' Ward, Dist. III(3), Calcutta on 22nd March, 1967. The order of transfer, as mentioned herein before, is dated 29th July,1961, The reference to the Inspecting Assistant Commissioner, Range IV, had been made by the Income-tax Officer 'A' Ward, Dist. III(3), Calcutta on 22nd March, 1967. Counsel for the revenue contended that Inspecting Assistant Commissioners exercised jurisdiction over certain Income-tax Officers and Inspecting Assistant Commissioner, Range V would be the competent authority pursuant to the allocation of functions made to be the Inspecting Assistant Commissioner to deal with cases and matters referrable by the Income-tax Officer 'C' Ward, Hundi Circle and not the Inspecting Assistant Commissioner, Range V. Inasmuch as the "case" was pending, and inasmuch as the "case" referred to in the order must be construed to include the penalty proceedings, Counsel for the revenue contended that by this process the Inspecting Assistant Commissioner, Range IV lost jurisdiction and a& such he had no longer authority to proceed with the said proceedings it was, therefore, contended that inasmuch as in the assessment order there was a finding that the assessee was prima facie guilty of concealment of income or of furnishing incorrect particulars and also it was so recorded in the assessment order that the Income-tax Officer dealing with the assesment had been so satisfied before making the assesment, the Income-tax Officer, 'C' Ward, Hundi Circle, Calcutta, on that basis had to make, as he did make, according to Counsel for the revenue, a fresh reference to the Inspecting Assistant Commissioner who would have jurisdiction over him, that is to say, Inspecting Assistant Commissioner, Range V. 10. In view, however, of the provisions of the statute it is difficult to accept this position. Section 274 provides that if a "case" fall under clause (c) of sub-section (1) of section 271 of the Act and the minimum penalty imposable exceeded a sum of Rupees one thousand, the Income-tax Officer should refer "the case" to the Inspecting Assistant Commissioner. Therefore, the penalty proceeding is "a case". It is "a case" which would come within the definition of the "case" as mentioned in the Explanation of section 127, but nevertheless it is "a case" which in contingencies where section 274 (2) is applicable has to be referred to the Inspecting Assistant Commissioner. So after the reference it becomes a "case" before the Inspecting Assistant Commissioner. It is "a case" which would come within the definition of the "case" as mentioned in the Explanation of section 127, but nevertheless it is "a case" which in contingencies where section 274 (2) is applicable has to be referred to the Inspecting Assistant Commissioner. So after the reference it becomes a "case" before the Inspecting Assistant Commissioner. After the reference the Inspecting Assistant Commissioner has to determine the question whether the penalty should be imposed or not and the statute imposes upon him the obligation of giving reasonable opportunity to the assessee before he does so. Therefore, a determination of that question involves discharge of quasi-judicial functions by the Inspecting Assistant Commissioner. A "case" which has been referred to an authority to be disposed of and determined by him in quasi-judicial manner becomes pending before that authority and unless there is a disposal one way or the other, the "case" is not disposed of lawfully, that is to say, where reference has been made to the Inspecting Assistant Commissioner, it has to be disposed of either by holding that no penalty is to be imposed or by holding that a penalty has to be imposed. In those circumstances the statute does not give any express or implied authority to thereferring authority, i.e. the Income-tax Officer to recall the reference made to an Inspecting Assistant Commissioner; in cases where reference under section 274 (2) is necessary after a reference has been made except for ministerial purposes the Income-tax Officer become functus officio. This position will be clear from the provisions dealing with appeals. Section 246 provides for appeal to the Appellate Assistant Commissioner from the orders of the Income-tax Officer. It provides for appeal from the order under section 271. But section 253 (1), clause (d) provides for appeals to the Appellate Tribunal from orders by the Inspecting Assistant Commissioner under sub-section (2) of section 274. Therefore, in cases where reference under section 274(2) is necessary and is made the order made upon that reference is an order of the Inspecting Assistant Commissioner. This is an order which the Inspecting assistant Commissioner is required by the statute to pass in a quasi-judicial manner. If that is the position, then a matter which has to be disposed of by the Inspecting Assistant Commissioner would be a "case" pending before the Inspecting Assistant Commissioner. This is an order which the Inspecting assistant Commissioner is required by the statute to pass in a quasi-judicial manner. If that is the position, then a matter which has to be disposed of by the Inspecting Assistant Commissioner would be a "case" pending before the Inspecting Assistant Commissioner. In this case the order of transfer was made transferring the cases from the Income-tax Officer 'A' Ward, Dist. III (3) to the Income-tax Officer, 'C' Ward, Hundi Circle. If the order of transfer is in such form, then it can only mean that the cases or matters before the said Income-tax Officer, 'A' Ward, Dist. III (3), have been transferred to the Income-tax Officer, 'C' Ward, Hundi Circle. It cannot transfer a case or matter which was not pending before the said Income-tax Officer, 'A' Ward, Dist. III (3), Calcutta. Indeed, it appears to me that such an order of transfer could not have been made because such an order of transfer in respect of cases which were not before the Income-tax Officer but which were pending before the' Inspecting Assistant Commissioner could not have been made under section 127 of the Act. Section 127 of the Act provides that the Commissioner might transfer any case from an Income-tax Officer to another Income-tax Officer. So the power and the authority' to transfer is limited but a case in which reference has been made to the Inspecting Assistant Commissioner and which is not before an Income-tax Officer cannot be transferred by virtue of section 127 of the Act. Counsel for the Revenue contended that inasmuch as the Inspecting Assistant Commissioner, Range IV, would have lost jurisdiction over the Income-tax Officer, 'C' Ward, Hundi Circle, the Inspecting Assistant Commissioner, Range V, could not have proceeded with the reference. I do not accept the position. After a reference has been made by a referring authority to another authority properly, the subsequent loss of jurisdiction by the referring authority does not affect the jurisdiction of the referred authority. The jurisdiction of a court or an authority is generally .determined with reference to the point of time when the court or the authority takes seisin of the matter or, the case, subject to any contrary provision in the statute or the order. Be that as it may, it is not necessary for me in this application to decide this question finally. Be that as it may, it is not necessary for me in this application to decide this question finally. But even if there was any possibility of any difficulty of the Inspecting Assistant Commissioner, Range IV, having jurisdiction over this matter, it could have been obviated by a special order under section 123 (I) by conferring on the Inspecting Assistant Commissioner, Range IV, that authority over the pending penalty cases. It would be, however, more difficult position if after the reference had been made to the Inspecting Assistant Commissioner, Range IV, the Commissioner had attempted to transfer the pending proceeding to the Inspecting Assistant Commissioner, Range V, I do not find in the statue any authority of the Commissioner similar to section 127 of the Act. Section 123 deals with the same situation as section 124, so far as the Income-tax Officers are concerned. ,But section 124 by itself without the provisions of section 127 would not have authorised the Commissioner to transfer a pending assessment proceeding from one Income-tax Officer to another Income-tax Officer by exercise of the powers of the Commissioner to determine the functions of the Income-tax Officer and similarly section 123 would not have authorised the Commissioner to transfer the pending proceedings from one Inspecting Assistant Commissioner to another Inspecting Assistant Commissioner. In any event this question of course is not necessary to be finally decided in this application as this is not in issue in this application. Parliament might consider the question of introducing a section similar to section 127 so far as -the Inspecting Assistant Commissioners are concerned or of adding a sub-section to section 127 of the Act to provide for transfer of penalty cases referred to the Inspecting Assistant Commissioners. 11. Counsel for the Revenue drew my attention to sections 107 and 186 of the Act. Sections 107 and 186 of the Act do not require any order of the Inspecting Assistant Commissioner but approval of the Inspecting Assistant Commissioner. When an authority is authorised to pass an order subject to approval of another authority, the order remains the order of the authority who is authorised to pass the order. Reliance was placed on the decision in the case of Commissioner of Income-tax, West Bengal v. A. K. Das, 77 ITR 31. When an authority is authorised to pass an order subject to approval of another authority, the order remains the order of the authority who is authorised to pass the order. Reliance was placed on the decision in the case of Commissioner of Income-tax, West Bengal v. A. K. Das, 77 ITR 31. However, in view of the statutory position with which I am concerned in this application and the actual controversy in application, it is not necessary to refer to the aforesaid decision. 12. Because of the lacuna in the Act and the procedural irregularity, though the Income-tax Officer in this case was satisfied prima facie that the assessee was guilty of concealment of income, it cannot be investigated any further. The result is unfortunate but cannot be helped. The Rule is, therefore, made absolute and the penalty proceedings are quashed. Let writs in the nature of Certiorari and Mandamus issue accordingly. If in the meantime the proceedings have been completed, the same are also quashed and set aside and the respondents are restrained from giving any effect to the same and would not be entitled to enforce the order passed in the proceeding. There will be no order as to costs. There will be a stay of operation of this order for a period of eight weeks. Interim order to continue during the stay.