AJIT K. SENGUPTA, J. ( 1 ) IN this reference under Section 256 (1) of the Income-tax Act, 1961, the following question of has has been referred to this court for the assessment year 1971-72. " Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in cancelling the levy of penalty under Section 271 (1) (c) of the Income-tax Act, 1961, holding that the Inspecting Assistant Commissioner had lost his jurisdiction over this-case after the omission of Section 274 (2) from the statute book with effect from April 1, 1976 ?" ( 2 ) SHORTLY stated, the facts are that during the assessment proceedings the Income-tax Officer found that the assessee's claim of commission payment of about Rs. 12. 13 lakhs was not supported by adequate evidence. The Income-tax Officer also found that some notices issued under Section 131 and letters written under Section 133 (b) to the alleged recipients of the commission were either returned unserved or there was no compliance with the terms of the notices though the same were-duly served. Consequently, the Income-tax Officer considered that the expenses in these accounts were considerably inflated in order to reduce taxable income. Accordingly, he disallowed a sum of Rs. 2 lakhs out of the total sum of Rs. 12. 13 lakhs. In these circumstances, the Income-tax Officer initiated penalty proceedings under Section 271 (1) (c) of the Act and referred the matter to the Inspecting Assistant Commissioner before April 1, 1976, for further necessary action. ( 3 ) THE Inspecting Assistant Commissioner issued a show-cause notice to the assessee. In reply, it was contended by the assessee that the provisions of Section 271 (1) (c) of the Income-tax Act, 1961, had no application in this case since after giving effect to the Appellate Assistant Commissioner's order the assessment resulted in loss. Such submission made on behalf of the assessee did not find favour with the Inspecting Assistant Commissioner since he had given a finding that there was a bogus claim of commission of Rs. 44,180. 36. The Inspecting Assistant Commissioner imposed a penalty of Rs. 44,180. 36 ( 4 ) BEING dissatisfied with the penalty order of the Inspecting Assistant Commissioner referred to above, the assessee filed an appeal before the Tribunal. 44,180. 36. The Inspecting Assistant Commissioner imposed a penalty of Rs. 44,180. 36 ( 4 ) BEING dissatisfied with the penalty order of the Inspecting Assistant Commissioner referred to above, the assessee filed an appeal before the Tribunal. After hearing the contentions, submissions and arguments of both the parties, the Tribunal cancelled the penalty order with the following observations :" We have heard the contentions of both the parties and are of the opinion that the order of the Inspecting Assistant Commissioner suffers from legal infirmity. It is well-settled that if the amendment of a statute deals merely with matters of procedure, the amended procedure will, prima facie, apply to all pending as well as future actions. The matter of jurisdiction is procedural and, therefore, it is to be guided by the law as it exists on the date of its exercise. Consequently, if on the day the Inspecting Assistant Commissioner imposed penalty, he had lost jurisdiction due to change in law, the order of penalty will be vitiated. . . . We hold that the Inspecting Assistant Commissioner had lost his jurisdiction over this case after the omission of Section 274 (2) from the statute book with effect from April 1, 1976. Consequently, we find it difficult to maintain the levy of penalty and so we cancel the same. " ( 5 ) THE facts are not in dispute. The assessment was completed on March 29, 1974, and on that day the Income-tax Officer initiated proceedings under Section 271 (l) (c) read with Section 274 of the Act. ( 6 ) SECTION 274 (2) relates to the jurisdiction of the Inspecting Assistant Commissioner to impose penalty. The Inspecting Assistant Commissioner had such jurisdiction between April 1, 1962, and March 31, 1971, if the minimum penalty imposable exceeded a sum of Rs. 1,000. Between the period April 1, 1971, to March 31, 1976, he had jurisdiction to impose penalty if the amount of income (as determined by the Income-tax Officer on assessment) in respect of which particulars had been concealed or inaccurate particulars had been furnished exceeded a sum of Rs. 25,000. This provision of Section 274 (2) was omitted with effect from April 1, 1976. Although the penalty proceedings was initiated and referred to the Inspecting Assistant Commissioner prior to April 1, 1976, the Inspecting Assistant Commissioner, however, passed the penalty order on March 30, 1977. 25,000. This provision of Section 274 (2) was omitted with effect from April 1, 1976. Although the penalty proceedings was initiated and referred to the Inspecting Assistant Commissioner prior to April 1, 1976, the Inspecting Assistant Commissioner, however, passed the penalty order on March 30, 1977. The " question, therefore, is whether after the omission of Section 274 (2) of the Act the Inspecting Assistant Commissioner had any jurisdiction to pass the penalty order after April 1, 1976, even though the proceeding had duly been referred to him by the Income-tax Officer prior to April 1, 1976. It appears that there is divergence of judicial opinion on this question. The Karnataka, Allahabad and Kerala High Courts have taken the view that after the omission of Section 274 (2), the Inspecting Assistant Commissioner is not empowered to pass the order of penalty on or after April 1, 1976, even in respect of the proceedings referred to him by the Income-tax Officer prior to April 1, 1976. The other view is that the Inspecting Assistant Commissioner has the jurisdiction to pass order in such a case which had been validly and properly referred to him prior to April 1, 1976. This view has been taken by the Punjab and Madhya Pradesh High Courts. ( 7 ) IN Arya Confectionery Works v. CIT [1987] 163 ITR 840, a similar question came up before the Madhya Pradesh High Court. There, the Madhya Pradesh High Court after considering its earlier decision held that where the Income-tax Officer made a reference to the Inspecting Assistant Commissioner for imposition of penalty under Section 271 (1) (c) of the Income-tax Act, 1961, in accordance with the provisions of Section 274 (2) of the Act, as it stood prior to April 1, 1976, when that provision was deleted by the Taxation Laws (Amendment) Act, 1975, the reference will not be invalid by the subsequent amendment deleting Section 274 (2) from April 1, 1976. ( 8 ) A Full Bench of the Punjab and Haryana High Court in CIT v. Mohinder Lal [1987] 168 ITR 101, Considered in detail a similar question. There, the Income-tax Officer initiated the proceedings before March, 1976, for levy of penalty under Section 271 (1) (c) as the concealment of income exceeded Rs. 25,000, but the reference was made to the Inspecting Assistant Commissioner in December, 1976. There, the Income-tax Officer initiated the proceedings before March, 1976, for levy of penalty under Section 271 (1) (c) as the concealment of income exceeded Rs. 25,000, but the reference was made to the Inspecting Assistant Commissioner in December, 1976. Even then the Full Bench held that the Inspecting Assistant Commissioner has jurisdiction to levy penalty. It was held that a reference to the Inspecting Assistant Commissioner would be deemed to have been made at the moment a finding is recorded that the income concealed exceeded Rs. 25,000 and a reference is ordered to be made and not when the ministerial act of sending the reference by the office is actually done. There the Punjab and Haryana High Court held that the judicial authority, once seized of the matter, cannot be divested of the same by later amendment of the law taking away its jurisdiction. ( 9 ) THIS court in CIT v. Eastern Development Corporation [1982] 135 ITR 516, was considering the amendment made in 1970 with regard to the quantum of concealment in respect whereof the Inspecting Assistant Commissioner would assume jurisdiction. Section 274 (2) of the Act was amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. The amended Section, inter alia, provides that if in a case falling under Section 271 (1) (c), the amount of income as determined by the Income-tax Officer on assessment in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds Rs. 25,000, the Income-tax Officer shall refer the case to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under the Chapter for the imposition of penalty. ( 10 ) THIS court held that the amended Section 274 (2) does not take away the jurisdiction of the Inspecting Assistant Commissioner in respect of proceedings for the imposition of penalty which are pending before him nor does it provide for a transfer of such penalty proceedings by him to the Income-tax Officer. It does not also say that the proceedings for the imposition of penalty which are pending before the Inspecting Assistant Commissioner shall abate if 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 Rs. 25,000. It does not also say that the proceedings for the imposition of penalty which are pending before the Inspecting Assistant Commissioner shall abate if 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 Rs. 25,000. ( 11 ) IN CIT v. Ganga Dayal Sarju Prasad [1985] 155 ITR 618, the Patna High Court was considering the amendment which was effected in 1970 in Section 274 (2) of the Act. There the Patna High Court considered the decision of this court in Eastern Development Corporation [1982] 135 ITR 516, and held that the jurisdiction of the Inspecting Assistant Commissioner to deal with the matter of penalty is to be looked at as on the date of initiation of proceedings and not with reference to subsequent events ; such jurisdiction cannot be divested by what happened subsequently. ( 12 ) A contrary view has been taken by the Orissa High Court in CIT v. Dhadi Sahu [1976] 105 ITR 56. In that case, while the matter was pending before the Inspecting Assistant Commissioner, Section 274 (2) was amended with effect from April 1, 1971, giving jurisdiction to the Inspecting Assistant Commissioner to impose penalty where the concealed income exceeded Rs. 25,000. The Tribunal held that in view of the amendment of Section 274 (2), the Inspecting Assistant Commissioner lost jurisdiction to impose the penalties since, before the amendment, he had jurisdiction in cases where the minimum penalty imposable exceeded Rs. 1,000, whereas, after the amendment, the Inspecting Assistant Commissioner had jurisdiction only in cases where the concealment by the assessee exceeded Rs. 25,000. ( 13 ) THE Orissa High Court held that as the matter was still pending and by change of procedure the reference became incompetent, the Inspecting Assistant Commissioner no longer had jurisdiction to deal with the matter or to complete the proceedings. The view of the Orissa High Court was that if the law is changed on the date of hearing the court should give effect to the "changed law" and it is the duty of the court to administer the law as on the date on which the court is administering it. The view of the Orissa High Court was that if the law is changed on the date of hearing the court should give effect to the "changed law" and it is the duty of the court to administer the law as on the date on which the court is administering it. ( 14 ) THE Allahabad High Court in CIT v. Jagannath Prasad Nanhoo Prasad [1987] 168 ITR 52, held that after the deletion of Sub-section (2) of Section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976, it is not necessary for the Income-tax Officer to refer the case of imposition of penalty to the Inspecting Assistant Commissioner where the concealment of income exceeded a sum of Rs. 25,000. There was also no saving clause in the Amendment Act to the effect that the proceedings for penalty initiated prior to the coming into force of the Amendment Act would continue to be governed by the unamended Act. Therefore, it is clear that Parliament did not intend to confer jurisdiction on the Inspecting Assistant Commissioner to levy penalty even in a case where the penalty proceedings were initiated prior to the coming into force of the Amendment Act. ( 15 ) WE have considered the rival contentions. In our view, the Inspecting Assistant Commissioner having once been seized of the penalty proceedings cannot be divested of the same after amendment of Section 274 (2) whereby the jurisdiction of the Inspecting Assistant Commissioner was taken away. The jurisdiction of the Inspecting Assistant Commissioner to deal with the penalty matter has to be looked at on the date of reference of the proceeding to him and not with reference to the subsequent events. Thus, where the Inspecting Assistant Commissioner had jurisdiction on the date penalty proceedings were duly referred by the Income-tax Officer and such proceedings were pending before him such jurisdiction cannot be divested by what has subsequently happened. On the date the matter was referred to the Inspecting Assistant Commissioner, he undoubtedly had jurisdiction to impose penalty but during the time when the matter of penalty had been pending in reference before him the law was changed. On the date the matter was referred to the Inspecting Assistant Commissioner, he undoubtedly had jurisdiction to impose penalty but during the time when the matter of penalty had been pending in reference before him the law was changed. This change would not automatically divest the Inspecting Assistant Commissioner of the power when the matter was referred to him unless an intention is shown by making provision for change-over of the proceedings from the Inspecting Assistant Commissioner, where there were any pending with him, to the Income-tax Officer who under the new law got jurisdiction to decide them. In the absence of any intention to divest the Inspecting Assistant Commissioner of the power to impose penalty after the amendment of Section 274 (2), the jurisdiction of the Inspecting Assistant Commissioner to levy penalty, where penalty proceedings were referred to him prior to the coming into force of the Amendment Act cannot be taken away. ( 16 ) WE agree with the views expressed by the Full Bench of the Punjab and Haryana High Court in Mohinder Lal's case [1987] 168 ITR 101 to the effect that an authority once seized of a matter lawfully would have jurisdiction to deal with it and its jurisdiction cannot be divested by a later amendment of law taking away its jurisdiction unless the amendment expressly or impliedly takes away that right with retrospective effect. ( 17 ) FOR the reasons aforesaid, we are of the view that the Tribunal was not right in cancelling the penalty on the ground that the Inspecting Assistant Commissioner had lost jurisdiction over this case. ( 18 ) WE, therefore, answer this question in this reference in the negative and in favour of the Revenue. There will be no order as to costs.