Syed Mohammed v. Commissioner of Income-tax — 1995 DIGILAW 145 (KER)

Judgment :- Mohammed, J. These Income-tax References arise from a common order passed by the Incometax Appellate Tribunal, Cochin Bench, dated 30th May, 1983, in R.A.No. 314 (Coch) 80 at the instance of the assessee and R.A.No. 324 (Coch) 80 at the instance of the Revenue. Both the applications are from the order in I.T.A. No. 150 (Coch) 78-79 relating to the assessment year 1973-74. 2. The questions referred to this court at the instance of the assessee are as follows: (1) Whether on the facts and circumstances of the case the Tribunal is right in holding that penalty is exigible u/s.271(1)(c) of the Incometax Act for the assessment year 1973-74? (2) Whether there was a valid reference by the I.T.O. u/s.274(2) to the Inspecting Asstt. Commissioner? The questions referred to at the instance of the Revenue are as follows: (1) Whether, on the facts and in the circumstances of the case, and also on an interpretation of S.271(1)(c) of the I.T. Act, the Tribunal is right in law and fact in holding that "he had concealed the particulars in respect of only that income which he should have disclosed in the return, namely, the capital gains arising from the transaction computed in accordance with the provisions of S.80-T and Sec.487? (2) Whether, on the facts and in the circumstances of the case, for the purpose of determining the quantum of concealment should not the Tribunal in law first set off the capital loss of Rs. 8,355/- relating to the assessment year 1972-73 against the capital gains for the assessment year 1973-74? (3) Whether, on the facts and in the circumstances of the case, does the Inspecting Asstt. Commissioner have jurisdiction to impose penalty? 3. The assessee who was doing business in manufacture and sale of beedies, had sold 23 cents of land with building thereon to his two daughters on 24-7-1972. The consideration for the sale was Rs.1 lakh. The assessee filed the return for the assessment year 1973-74 disclosing an income of Rs. 28,320/-. The Incometax Officer in the course of assessment proceeding noticed a debt of Rs. 50,000- in the capital account of the assessee. This was explained by the assessee as per his letter dated 12-9-1975 that the value of the property had been shown at Rs. 1,50,000/- in the capital account for obtaining loans from banks and a debt of Rs. The Incometax Officer in the course of assessment proceeding noticed a debt of Rs. 50,000- in the capital account of the assessee. This was explained by the assessee as per his letter dated 12-9-1975 that the value of the property had been shown at Rs. 1,50,000/- in the capital account for obtaining loans from banks and a debt of Rs. 50,000/- was made in the capital account in as much has the property had been sold to his daughters for Rs.1 lakh. However, the officer computed the capital gain arising from the above sale at Rs. 1,09,900/-. Ultimately the Incometax Officer determined the total income as Rs. 94,380/- as per the assessment order for the year 1973-74. Penalty proceeding was also initiated for concealment of income and it was referred to the Inspecting Assistant Commissioner since the minimum penalty imposable was more than Rs. 25,000/-. 4. Though the assessee filed an appeal against the assessment order for the year 1973-74, the Appellate Assistant Commissioner confirmed the assessment. The assessee then filed a further appeal before the Tribunal. When the matter was pending before the Tribunal, the Inspecting Assistant Commissioner initiated the proceeding for levy of penalty under S.271(1)(c). He finally came to the conclusion that the assessee had concealed the particulars of his income to the extent of Rs. 1,09,900/-. He, therefore, levied a penalty equal to the amount concealed as per order dated 18-3-1976 (Annexure a). In appeal the Tribunal held that penalty was exigible, in view of the fact that the assessee had not disclosed the gains which arose from the sale of property in the return. As far as the amount of income concealed, the Tribunal held that the assessee could be said to have concealed only that income which he should have disclosed in the return, namely capital gains arising from the transaction computed in accordance with the provisions of S.80-T and S.48. The Tribunal also observed that the assessee had concealed only an income of Rs. 68,185/- in the return of income and that the minimum penalty imposable was only Rs. 68,185/-. However, following the decision of the Special Bench of the Tribunal in I.T.A. Nos. The Tribunal also observed that the assessee had concealed only an income of Rs. 68,185/- in the return of income and that the minimum penalty imposable was only Rs. 68,185/-. However, following the decision of the Special Bench of the Tribunal in I.T.A. Nos. 40 to 42 (Coch)/ 77-78 in the case of Joseph John, Thuravoor, the Tribunal found that subsequent to the deletion of S.274(2) with effect from 1-4-1976 the Inspecting Assistant Commissioner had no jurisdiction to levy penalty for alleged concealment of income under S.271(1)(c) even in cases referred to him earlier to 1-4-1976. Consequently, the Tribunal set aside the order of the Inspecting Assistant Commissioner and cancelled the penalty as per the order dated 16-8-1980 (Annexure-B). 5. When the reference cases came up for consideration before the Division Bench on 6-7-1993, T.L. Viswanatha Iyer on behalf of the Division Bench ordered thus: "These references are at the instance of the assessee and the Revenue and concern the imposition of penalty on the deceased assessee under S.271(1)(c) of the Income Tax Act, 1961 for the assessment year 1973-74. While the assessee contended that he had not concealed particulars of any income, it was the case of the Department that the case squarely fell within S.271(1)(c). The penalty had been imposed by the Inspecting Assistant Commissioner purporting to act under S.274(2) of the Act, which had been repealed with effect from 1-4-1976. The assessee had raised a contention that the Inspecting Assistant Commissioner derives jurisdiction to impose penalty only if there is a valid reference to him by the Incometax Officer under S.274(2). The assessment was completed on 30-3-1976 and the Incometax Officer informed the assessee by a letter of even date that the case was being referred to the Inspecting Assistant Commissioner for the purpose of levy of penalty. The original of that letter was despatched to the Inspecting Assistant Commissioner on 31-3-1976 and was admittedly received by the Inspecting Assistant Commissioner on 1-4-1976. According to the assessee this letter contained only a proposal to initiate penalty proceedings and did not actually make any reference of any question of penalty to the Inspecting Assistant Commissioner. The assessee therefore contended that there was no valid reference to the Inspecting Assistant Commissioner. It was this contention that resulted in the question mentioned earlier being referred to this court at the instance of the assessee.' 6. The assessee therefore contended that there was no valid reference to the Inspecting Assistant Commissioner. It was this contention that resulted in the question mentioned earlier being referred to this court at the instance of the assessee.' 6. In view of the above background of the case, the Division Bench further observed: "Consideration of the contention of the assessee as to whether there was a valid and proper reference depends very much on the reference if any, made by the Incometax Officer and also on the terms of the letter which he had written to the Inspecting Assistant Commissioner on 31-3-1976. A proper adjudication of the point requires perusal of that letter of 31-3-1976 as also on the existence of any other reference made by the Incometax Officer to the Inspecting Assistant Commissioner on the question of penalty. Since these details are essential for a proper decision of the case, we are inclined to call for a supplementary statement from the Tribunal on these aspects." Therefore, the Division Bench directed the Tribunal to furnish a supplementary statement of the case, incorporating the order of assessment made on the assessee, the order of the Incometax Appellate Tribunal in I.T.A.No. 740/Coch/77-78 dated 31-3-1980 and the letter of the Incometax Officer dated 31-3-1976 sent to the Inspecting Assistant Commissioner. 7. Pursuant to the above direction of the Division Bench, the Tribunal had drawn up a supplementary statement wherein it has been stated thus: "Neither the revenue nor the assessee is able to furnish the letter of the Incometax Officer dated 31-3-1976 mentioned as item No.1 above. However the Revenue has furnished the copy of report of the Incometax Officer dated 18-8-1977. It is represented before us that miscellaneous records for the assessment year 1973-74 with the Incometax Officer as also Inspecting Assistant Commissioner's file in respect of penalty proceedings would appear to have been weeded out." Subsequently, the Incometax Reference cases with the supplementary statement dated 29-7-1993 came up for hearing again before the Division Bench. 8. The Division Bench, however, considered it necessary to refer the cases for decision by a Full Bench of this court. T.L. Viswanatha Iyer. 8. The Division Bench, however, considered it necessary to refer the cases for decision by a Full Bench of this court. T.L. Viswanatha Iyer. J. on behalf of the Division Bench, in the order of reference, has observed as below: "One of the questions which arises for consideration in these references is whether the jurisdiction of the Inspecting Assistant Commissioner to levy penalty under S.274(2) of the Incometax Act, 1961 is preserved after 1-4-1976 so as to justify his action in imposing penalty on the assessee in these cases. A Full bench of this court had in the decision in C.I.T. v. Issac, (1987 (2) KLT 429 = (1987) 168 I.T.R.793) held that the Inspecting Assistant Commissioner ceased to have any jurisdiction in the matter after 1st April, 1976. The Supreme Court had in a recent decision in C.I.T. v; Dhabi sahu (1993) 1991. T.R.610) occasion to consider S.274(2) in so far as it related to the period from April 1,1971 when his jurisdiction was confined to cases where the concealed income exceeded Rs. 25,000/-. In that context the Supreme Court observed that when there is a change in the forum it does not affect the pending actions unless an intention to the contrary is clearly shown. The question is whether this decision applies to the instant cases where it was not merely a change of forum, but total abolition of the jurisdiction of the Inspecting Assistant Commissioner to impose penalty. Since the question whether this decision impliedly overrules the decision of the Full Bench of this court in 1987 (2) KLT 429 =1681.T.R.793 arises for consideration and since the decision of the Supreme Court cannot be stated to be directly in point, as stated by us earlier, we feel it appropriate that these cases are considered by a Full Bench of this court." That is how the above Tax Reference Cases are coming up for hearing before us. 9. Clause (c) of S.271(1) as it stood at the relevant time is as follows: 271(1). If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person - (a) . 9. Clause (c) of S.271(1) as it stood at the relevant time is as follows: 271(1). If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person - (a) . (b) (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent, but which shall not exceed one and a half times the amount of the lax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. (Explanation omitted) Section 271(1) confers power on the Incometax Officer or the Appellate Assistant Commissioner to impose penalty under the said Section on satisfaction of the matters specified in clauses (a), (b) and (c). The procedure for levy of penalty is prescribed in S.274. During the relevant period the power to impose penalty is vested with the Inspecting Assistant Commissioner. He will get the jurisdiction to levy penalty only when the Incometax Officer refers the case to him. The provision of S.274(1) and (2) as it stood at the relevant period is extracted below: "274(1) 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 sub-section (1) of S.271, if in a case falling under clause (c) of that sub-section, the amount of income (as determined) by the Incometax 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 cases to the Inspecting Assistant Commissioner who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty." The above sub-section (2) authorising the Incometax Officer to refer the case to the Inspecting Assistant Commissioner was however deleted with effect from 1-4-1976 as per the Taxation Laws (Amendment) Act, 1975. After the amendment the power has been conferred on the Incometax Officer to levy penalty in cases of concealment. 10. After the amendment the power has been conferred on the Incometax Officer to levy penalty in cases of concealment. 10. The prime question which requires to be decided in the present case in view of the aforesaid amendment is whether the Inspecting Assistant Commissioner has jurisdiction to levy penalty on a reference received by him on 1-4-1976. In other words, the question is whether there is a valid reference by the Incometax Officer or reference made by him on 31-3-1976 is sufficient in law. 11. What is jurisdiction? Jurisdiction is the power, right or authority to take cognizance and decide any matter according to law. In Subramania Pattar v. Narayanan Pattar (28 I.C. 189) it is laid down that the word jurisdiction means "the authority or power which a court has to do justice in the causes of complaint brought before him." The Supreme Court in Ajit Kumar Palit v. State of West Bengal and another (AIR 1963 SC 765) held: "As soon as a special judge receives the orders of allotment of the case passed by the State Government it becomes vested with jurisdiction to try the case and when it receives the record from the Government it can apply its mind and issue notice to the accused and thus start the trial of the proceedings assigned to it by the State Government." Thus it is abundantly clear that an authority can take cognizance of conferment of jurisdiction or power only when it is brought to its notice or when it is consciously made known to it. Without taking cognizance of conferment of power, no authority can be said to have assumed jurisdiction to do an act. The cognizance of conferment of jurisdiction is a pre-requisite for exercise of power. 12. In the instant case the Incometax Officer has power to refer the question of levying penalty to the Inspecting Assistant Commissioner under S.274(2) in case the concealment of income exceeds a sum of twenty five thousand rupees. Under the above provision the Inspecting Assistant Commissioner has power or jurisdiction to levy penalty but it is only a conditional power. In the absence of a reference by the Incometax Officer the Inspecting Assistant Commissioner has no power to levy penalty. The power of the Inspecting Assistant Commissioner to levy penalty under S.274(2) is dependent on the exercise of power of reference by the Incometax Officer. In the absence of a reference by the Incometax Officer the Inspecting Assistant Commissioner has no power to levy penalty. The power of the Inspecting Assistant Commissioner to levy penalty under S.274(2) is dependent on the exercise of power of reference by the Incometax Officer. But the exercise of power of reference by the Incometax Officer does not ipso facto confer jurisdiction on the Inspecting Assistant Commissioner to levy penalty .The conferment of jurisdiction will be complete only when the order of reference is received by the Inspecting Assistant Commissioner or otherwise made known to him directly. In other words, the conferment of jurisdiction shall reach within his knowledge and as soon as it is known he is entitled to take cognizance of the powers conferred on him by virtue of reference made by the Incometax Officer under S.274(2). 13. The question whether the reference was pending before the Inspecting Assistant Commissioner on 31-3-1976 requires to be examined. No doubt, the reference was ordered by the Incometax Officer on 31-3-1976. If on the same day the reference order was served on the Inspecting Assistant Commissioner it would have been possible for the Revenue to contend that the reference was pending before him on 31-3-1976. It is the case of the Revenue that the letter stated to have been issued by the Incometax Officer was received by the Inspecting Assistant Commissioner on 1-4-1976. As observed by the Division Bench in the order dated 6th July, 1993, the question whether there was a valid and proper reference depends very much on the reference, if any, made by the Incometax Officer and also on the terms of letter which he had written to the Inspecting Assistant Commissioner on 31-3-1976. It was for that reason, the Division Bench directed the Tribunal to produce the letter of the Incometax Officer dated 31-3-1976 sent to the Inspecting Assistant Commissioner. The burden is on the Revenue to produce the said letter in view of the direction issued by the Division Bench. That burden having not been discharged it is difficult for the Revenue to argue that there was a valid reference in this case on the basis of the said letter. On the other hand, the assessee is justified in contending that there was no valid reference for the reason that the said letter was admittedly received by the Inspecting Assistant Commissioner only on 1-4-1976. On the other hand, the assessee is justified in contending that there was no valid reference for the reason that the said letter was admittedly received by the Inspecting Assistant Commissioner only on 1-4-1976. There was no case for the Revenue that the Incometax Officer after ordering reference, communicated the same to the Inspecting Assistant Commissioner on the same day, namely, 31'3-1976 either directly or otherwise. That being so, we are constrained to hold that there was no valid reference by the Incometax Officer to the Inspecting Assistant Commissioner under S.274(2) of the Act. 14. A Full Bench of this court in C.I.T. v. Issac, (1987 (2) KLT 429 = (1987) 168 ITR 793) held that the Inspecting Assistant Commissioner had no jurisdiction to levy penalty under S.271(1)(c) after 31-3-1976. That was a case where the Incometax Officer completed the assessment on January 28, 1974 and later a revised assessment order was passed on October 21, 1975 on the ground that the assessee made certain concealment of income. After the revised assessment, the matter was referred to the Inspecting Assistant Commissioner prior to 1st April, 1976 under S.274(2) of the Act for imposition of penalty. The Inspecting Assistant Commissioner by order dated October 20,1977 imposed penalty. The assessee filed an appeal before the Tribunal questioning the jurisdiction of the Inspecting Assistant Commissioner to impose penalty after S.274(2) was omitted with effect from April 1, 1976. The Tribunal set aside the order imposing penalty on the ground that the Inspecting Assistant Commissioner had no jurisdiction to impose penalty after the Taxation Laws (Amendment) Act, 1975 came into force. This view was affirmed by this court on the reference made at the instance of the Revenue. The Full Bench observed: "As noticed earlier in this judgment, S.271(1) of the Incometax Act confers jurisdiction on the Incometax Officer to impose penalty on satisfaction of the conditions mentioned in sub-clauses (a), (b) or (c). Section 274(2) of the Act had invested the Inspecting Assistant Commissioner with the power of the Incometax Officer to impose penalty in cases mentioned therein. The jurisdiction of the Inspecting Assistant Commissioner under S.274(2) was only that of the Incometax Officer under S.271(1) of the Act. Section 274(2) of the Act had invested the Inspecting Assistant Commissioner with the power of the Incometax Officer to impose penalty in cases mentioned therein. The jurisdiction of the Inspecting Assistant Commissioner under S.274(2) was only that of the Incometax Officer under S.271(1) of the Act. By deletion of sub-section (2) of S.274 by the Taxation Laws (Amendment) Act, 1975, the Inspecting Assistant Commissioner is divested of the jurisdiction of the Incometax Officer under S.271(1) of the Act and on such divestiture, the Inspecting Assistant Commissioner ceased to have jurisdiction to proceed under S.271 of the Act. After the amendment that came into force on April 1, 1976, the authorities competent to impose penalty are those mentioned in S.271 of the Act. The change of forum is a matter of procedure and the Amendment Act is retrospective in regard also to matters pending before the Inspecting Assistant Commissioner." 15. However, it may be observed here that the validity of the reference or the correctness of the assumption of power by the Inspecting Assistant Commissioner on the basis of reference were never in issue in the above case. Further, it was admittedly a case where reference was validly made prior to April 1, 1976. In view of this distinction in facts, we do not propose to place reliance on the said decision of the Full Bench. That being so, it is inessential for us to decide the question urged by the Revenue that the above Full Bench decision has been impliedly overruled by virtue of the recent decisions of the Supreme Court in C.I.T. v. Dhadi Sahu (1993) 199 ITR 610) and Varkey Chacko v. C.I.T. 1993 (2) KLT 843 = (1993) 203 ITR 885). 16. The Supreme Court in C.I.T. v. Dhadi Sahu (1993) 199 ITR 610) observed: "In our opinion, therefore, what is material to be seen is as to when the reference were initiated. If the reference was made before April 1,1971, it would be governed by S.274(2) as it stood before that date and the Inspecting Assistant Commissioner would have jurisdiction to pass the order of penalty." That was a case where the Incometax Officer initiated penalty proceedings under S.271(1)(c) alter passing the assessment order on February 28, 1970. Since the penalty to be imposed would exceed Rs. 1,000/- the Incometax Officer referred the ease under S.274(2), as it then stood, to the Inspecting Assistant Commissioner. Since the penalty to be imposed would exceed Rs. 1,000/- the Incometax Officer referred the ease under S.274(2), as it then stood, to the Inspecting Assistant Commissioner. Pending the proceedings, S.274(2) was amended with effect from April 1,1971.On February 15,1973 the Inspecting Assistant Commissioner passed orders imposing penalty for the assessment years 1968-1969 and 1969-1970. In this case, reference of the case was validly made by the incometax Officer before April, 1, 1971 and the Inspecting Assistant Commissioner validly acquired jurisdiction to pass the orders imposing penalty. Thus there was no dispute that the reference was valid and that the conferment of jurisdiction on Inspecting Assistant Commissioner was legal. Therefore, what the Supreme Court meant while saying "when the references were initiated" was only the valid references and not the initiation of references invalidly made. If the reference was valid, then the initiation was also valid. In the present case before us, the initiation of reference was invalid as there was no valid reference. Therefore, the decision of the Supreme Court in Dhadi Sahu's case supra, has no application in this case. 17. The factual situation in Varkey' Chacko v. Commissioner of Incometax, 1993 (2) KLT 843 = (1993) 203 ITR 885) is no way different. That was a case where the Incometax Officer made the order of assessment and initiated penalty proceedings against the assessee on 27th March 1972, ie. after S.272(2) of the Act was amended by the Taxation Laws (Amendment) Act, 1970 with effect from 1st April 1971. The Incometax Officer imposed a penalty of Rs. 10,000/- on 26th March, 1974 and the Appellate Tribunal confirmed his order holding that the law governing imposition of penalty was the law as in force on the date when the return was filed. On a reference the High Court reversed the Tribunal's order holding that the law applicable was that in force on the date of the assessment order. This view of the High Court was affirmed by the Supreme Court in appeal. The Supreme Court further observed that the "Incometax Officer had jurisdiction to impose the penalty and he need not have referred the matter to the Inspecting Assistant Commissioner. In this case also there was no question of validity of reference or the conferment of jurisdiction on the Inspecting Assistant Commissioner. The Supreme Court further observed that the "Incometax Officer had jurisdiction to impose the penalty and he need not have referred the matter to the Inspecting Assistant Commissioner. In this case also there was no question of validity of reference or the conferment of jurisdiction on the Inspecting Assistant Commissioner. Thus, we are of the view that the principles laid down in Varkey Chacko's case supra, have also no application in the facts of the present case. 18 In Banarsi Debi and another v. Incometax Officer (1964) 53 ITR 100) the Supreme Court held: "The rule of construction that a taxing statute must be couched in express and unambiguous language and if a case is not covered within the four comers of its provisions no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature" What we are concerned in these cases are the provisions authorising the levy of penalty. The above rule can therefore be applied herewith equal force but with stronger impact. 19. In view of the discussion herein before, we answer the second question of law framed at the instance of the assessee in the negative and in favour of the assessee. Likewise the third question framed at the instance of the Revenue is answered in the negative and in favour of the assessee. The other questions raised both at the instance of the assessee and the Revenue are questions of facts decided by the Tribunal and we, therefore, decline to answer them in the exercise of advisory jurisdiction under S.260 of the Act. Shanmugam, J. 20. The Full Bench of Kerala High Court in Commissioner of Income-tax v. P.I Issue & others, 1987 (2) KLT 429 (FB) = (1987) 168 ITR 793 has taken the view that by the Taxation Laws (Amendment) Act, 1970 amending S.274(2) with effect from 1-4-1976, the Inspecting Assistant Commissioner has ceased to have jurisdiction to impose penalty under S.271(1)(c) of the Income-tax Act, 1961 thereinafter referred to as the Act). The Full Bench further held that the change of forum is a matter of procedure and the Amendment Act is retrospective in regard also to matters pending before the Inspecting Assistant Commissioner and therefore, he had no jurisdiction to impose penalty under S.271(1)(c). The Full Bench further held that the change of forum is a matter of procedure and the Amendment Act is retrospective in regard also to matters pending before the Inspecting Assistant Commissioner and therefore, he had no jurisdiction to impose penalty under S.271(1)(c). In a subsequent decision in Commissioner of Income-tax v. Dhadi Sahu - (1993) 199 ITR 610) the Supreme Court held that if the reference was made before 1-4-1971 it would be governed by S.274(2) as it stood before and the Inspecting Assistant Commissioner would continue to have jurisdiction. The Division Bench by order dated 20-8-1993 referred the matter to the Full Bench to consider the question whether the decision of the Full Bench in Commissioner of Income-tax v. P.I. Issac & others, 1987 (2) KLT 429 = (1987) 168 ITR 793) is impliedly overruled by the Supreme Court decision in Commissioner of Income-tax v. Dhadi Sahu - (1993) 199 ITR 610). 21. The Income-tax Appellate Tribunal, Cochin Bench has referred the following questions of law for the decision of this Court under S.256(1) of the Income-tax Act, 1961. " 1. Whether on the facts and circumstances of the case the Tribunal is right in holding that penalty is exigible under S.271(1) (c) of. the I.T. Act for the assessment year 1973-74? 2. Whether there was a valid reference by the I.T.O. under S.274(2) to the Inspecting Asstt. Commissioner?" 22. The following questions at the instance of the Commissioner of Income-tax are also referred for the decision of this Court under S.256(1) of the Income-tax Act, 1961. 1. Whether, on the facts and in the circumstances of the case, and also on an interpretation of S.271(1)(c) of the I.T. Act, the Tribunal is right in law and fact in holding that the had concealed the particulars in respect of only that income which he should have disclosed in the return, namely, the capital gains arising from the transaction computed in accordance with the provisions of S.80-T and S.481? 2. Whether, on the facts and in the circumstances of the case, for the purpose of determining the quantum of concealment should not the Tribunal in law first set off the capital loss of Rs. 8355/- relating to the assessment year 1972-73 against the capital gains for the assessment year 1973-74? 3. Whether, on the facts and in the circumstances of the case, does the Inspecting Asstt. 8355/- relating to the assessment year 1972-73 against the capital gains for the assessment year 1973-74? 3. Whether, on the facts and in the circumstances of the case, does the Inspecting Asstt. Commissioner have jurisdiction to impose penalty?" 22A. The facts leading to the above reference is as follows. The assessee on 24-7-1972 sold 23 cents of land with a building thereon at Chalai to his two daughters under a registered deed for a consideration of Rs.1 lakh. The assessee filed the return disclosing an income of Rs. 28,320/-for the assessment year 1973-74 without disclosing the capital gains arising from the above sale. The Income-tax Officer noticed a debit of Rs. 50,000/- in the capital account of the assessee in the course of assessment proceedings and therefore, requested the assessee by his letter dated 1-9-1975 to explain as to why such debit has been made. The assessee by his letter dated 12-9-1975 explained that the value of the property had been shown at Rs. 1,50,000/- for obtaining large loans from banks and since the sale consideration was only for Rs.1 lakh a debit of Rs. 50,000/- was made in the capital account. In the course of valuation of the property by the departmental valuer the assessee by his letter dated 29-7-1975 informed the valuer that the total amount due to his daughters was Rs. 2,37,000- and odd by way of business interest and the property was sold to them not for the stated consideration of Rs. I lakh but in discharge of the aforesaid liability. In effect the assessee had admitted the actual market value as valued by the department. Ultimately the Income-tax Officer by his order dated 30-3-1976 determined the total income as Rs. 94,380/-. In doing so he computed the capital gains arising from the above sale at Rs. 1,09,900/- taking the market value of the property at Rs. 2,44,960/- as sale consideration and Rs. 1,35,000/- as its value as on 1-1-1954. He also initiated action for levy of penalty in his order dated 30-3-1976, the operative portion of it is as follows: "Since this income is not disclosed in the return, penalty proceedings are initiated under S.271(1)(c) of the Income-tax Act and the matter is referred to the Inspecting Assistant Commissioner of Incometax, Trivandrum." 23. The order of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Tribunal. The order of the Income-tax Officer was confirmed by the Appellate Assistant Commissioner and the Tribunal. In the meantime the Inspecting Assistant Commissioner of Income-tax in his proceedings dated 18-3-1978 found that the assessee had conceded the particulars of his income to the tune of Rs. 1,09,900/-and therefore, levied a penalty of Rs. 1,09,900/- under S.271(1)(c) of the Income-tax Act. On appeal before the Income-tax Appellate Tribunal the following questions were raised and answered: (1) Whether the assessee had concealed income in the return filed by him, wherein he had disclosed the income of Rs. 28,320/-? Ans: From the above it will be clearly seen that the assessee had not disclosed the gains arising from the above sale in the return filed by him. Indeed, he did not disclose the transaction at all. The assessee had not offered any explanation for the omission. Therefore, it has been held that penalty is exigible for concealment of income under S.271(1)(c) of the Income-tax Act, 1961. (2) As regards the quantum of penalty. Ans: The assessee had concealed the particulars in respect of only mat income which he should have disclosed in the return, namely, the capital gains arising from the transaction computed in accordance with the provisions of S.80-T and S.48. (3) Whether the concealed income is to be taken as Rs. 68,185/- as claimed by the assessee or Rs. 71,110/- as claimed by the departmental representative? Arcs: The assessee had concealed income of Rs. 68,185/- in the return. The minimum penalty imposable is therefore Rs. 68,185/-. (4) Whether the reference was valid? Ans: The Income-tax Inspecting Assistant Commissioner has no jurisdiction to levy penalty and therefore, cancelled the penalty. The Tribunal also observed that if they had come to the conclusion that I.A.C. has jurisdiction, they would have reduced the penalty to Rs. 68,185/-. 24. In the above facts and circumstances the questions of law mentioned earlier were referred to this Court both at the instance of the assessee (ITR 106/83) as well as the revenue (ITR 107/83) and subsequently the Division Bench referred the matter to the Full Bench. As the reference to Full Bench related to the second question viz. whether there was a valid reference by the I.T.O. under S.274(2) to the Inspecting Assistant Commissioner, it is taken up first for consideration. 25. As the reference to Full Bench related to the second question viz. whether there was a valid reference by the I.T.O. under S.274(2) to the Inspecting Assistant Commissioner, it is taken up first for consideration. 25. Section 271(1) of the Income-tax Act empowers the Income-tax Officer or the Appellate Assistant Commissioner as the case may be to impose penalty on satisfaction of the matters specified in clauses (a), (b) & (c). As we are concerned with clause (c) of S.271(1) as it stood the same is extracted below: "271(1). If the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person (a ) (b) (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - (0 (a) (b) (ii) (iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent, but which shall not exceed one and a half times the amount of the tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income. Explanation: - Where the total income returned by any person is less than eighty per cent of the total income thereinafter in this Explanation referred to as the correct income) as assessed under S.143 or S.144 or S.147 (reduced by the expenditure incurred bonafide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or willful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section." 26. The procedure to impose penalty is set out under S.274. The jurisdiction to impose penalty according to this section during the relevant time in this case vested with the Inspecting Assistant Commissioner on reference by the Income-tax officer. The relevant portion of the said provision is as follows: "274(1). The procedure to impose penalty is set out under S.274. The jurisdiction to impose penalty according to this section during the relevant time in this case vested with the Inspecting Assistant Commissioner on reference by the Income-tax officer. The relevant portion of the said provision is as follows: "274(1). 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 sub-section (1) of S.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." Sub-section (2) of S.274 was deleted by the Taxation Laws (Amendment) Act, 1975 with effect from 1-4-1976. After the amendment the Assessing Officer is empowered - to levy penalty in cases of concealment irrespective of quantum of penalty or concealed income, subject, however, to the limitation provided under S.271(1)(iii) to the effect that prior approval of the I.A.C. has to be obtained by the Assessing Officer where the concealed income exceeds Rs. 25,000/-. Whereas the law stood before the amendment the Assessing Officer has to refer the case to the I.A.C. for imposing penalty. 27. The question that arise for our consideration is whether it is open to the I.A.C. to impose penalty even after 1st April, 1976 in cases which have been validly referred to him earlier? 28. Divergent views were taken by different High Courts on this point. In one set of cases the courts have taken the view that the new procedure would apply only to pending matters and therefore, I.A.C. would have no jurisdiction to continue after 1st April, 1971 or 1976 as the case may be; in another set of cases the courts have taken the view that once reference is made regardless of change in the law, the I.A.C. would continue to have the jurisdiction to impose the penalty. 29. 29. The controversy has now been set at rest by two decisions of the Supreme Court in C.I.T. v. Dhadi Sahu, (1993) 199 ITR 610 and Varkey Chacko v. C.I.T. (1993 (2) KLT 843 = (1993) 203 ITR 885). 30. The Full Bench of this Court in C.I.T. v. Isac,1987 (2) KLT 429 =168 ITR 793 while holding that the IAC ceased to have jurisdiction to proceed under S.271 of the Income-tax Act after amendment came into force on 1st April, 1976, mainly followed the reasoning of Division Bench of the Orissa High Court in C. I. T. v. Dhadi Sahu (105 ITR 56) in support of their conclusion in preference to the view of the Division Bench of Kerala High Court in Varkey Chacko's case (136 ITR 733). On appeal against the Orissa High Court's decision in CFI 'v. Dhadi Sahu, the Supreme Court reversed it in 199ITR 610. Similarly the Supreme Court confirmed the decision in Varkey Chacko's case in 1993 (2) KLT 843 = 203 ITR 885. Hence we have to hold that the Full Bench decision in CIT v. Issac, (1987 (2) KLT 429 =168 ITR 793) has been impliedly overruled by the Supreme Court in CIT v. Dhadi Sahu (199 ITR 610)' and Varkey Chacko v. CIT, (1993 (2) KLT 843 = 203 ITR 885). 31. In analysing these decisions we find that the Full Bench decision in CIT v. Issac, (1987 (2) KLT 429 = 168 ITR 793) was dealing with the Taxation Laws (Amendment) Act, 1975, which came into force on 1st April, 1976. In that case the Income-tax Officer referred the case to I.A.C. prior to April 1, 1976, as the concealment of income exceeded Rs. 25,000/-. The reference was made at a time when the I.A.C. had jurisdiction and was the authority competent to impose penalty. But by the time the I.A.C. passed orders imposing the penalty, the Amendment Act, 1975 has come into effect. The Full Bench referred to the views taken in CIT v. Varkey Chacko (136 ITR 733 - Ker.), Jan Brothers v. Union of India (77 ITR 107 - SC), CIT v. Bilabial & Co. But by the time the I.A.C. passed orders imposing the penalty, the Amendment Act, 1975 has come into effect. The Full Bench referred to the views taken in CIT v. Varkey Chacko (136 ITR 733 - Ker.), Jan Brothers v. Union of India (77 ITR 107 - SC), CIT v. Bilabial & Co. (122 ITR 301- Guj.) and CIT v. Raman Industries (121 ITR 405 -P & H) wherein it has been held that the competence of the authority to exercise the power is to be determined with reference to the law in force on the date of initiation of penalty proceedings. These decisions have taken the view that for the imposition of penalty, it is not the assessment year or the date of the filing of the return which is important but it is the satisfaction of the income-tax authorities that a default has been committed by the assessee which would attract the provisions relating to penalty. The crucial date, therefore, for the purposes of penalty, is the date of the completion of the assessment, and the change, in forum does not affect pending actions unless intention to the contrary is clearly evinced. The Full Bench chose to follow the contrary view taken by the Orissa High Court in CIT v. Dhadi Sahu (105 ITR 56) and Radheshyam agarwalla v. CIT(113ITR 196), CIT v. Om Sons (116 ITR 215 -All.), Abdul Azeez (R) v. CIT (128 ITR 547 - Kar.) and Banwarilal Chowkhani v. C. W. T. (142 ITR 264 - Gauhati), and held that the change of forum is a matter of procedure and the Amendment Act is retrospective in regard also matters pending before the Inspecting Assistant Commissioner, and therefore the I.A.C. had no jurisdiction to levy the penalty. It is pertinent to note that the Full Bench quoted with approval extensively from the Division Bench decision in Varkey Chacko's case, at pages 798, 799 and 800 stating that "we are in agreement with the above proposition of law laid down by the Division Bench" (p.800). After that the Full Bench at page 802 went into the contrary view taken by the Orissa High Court (105 ITR 56) and other courts and taken the similar view. 32. The Supreme Court in 199 I.T.R.610 has considered similar question whether the amendment brought out in S.274(2) with effect from 1-4-1971 was not applicable to pending references. After that the Full Bench at page 802 went into the contrary view taken by the Orissa High Court (105 ITR 56) and other courts and taken the similar view. 32. The Supreme Court in 199 I.T.R.610 has considered similar question whether the amendment brought out in S.274(2) with effect from 1-4-1971 was not applicable to pending references. The Supreme Court has held that it is a general principle that a law which brings about a change in the forum does not affect pending actions unless an intention to the contrary is clearly shown. The Supreme Court further held that the previous operation of S.274(2), as it stood before 1st April, 1971 and anything done there under continued to have effect under S.6(b) of the General Clauses Act, 1897, enabling the I. A.C. to pass orders imposing penalty in pending references. The Supreme Court concluded with the following words: "In our opinion, therefore, what is material to be seen is as to when the references were initiated. If the reference was made before April 1,1971 it would be governed by S.274(2) as it stood before that date and the Inspecting Assistant Commissioner would have jurisdiction to pass the order of penalty". The Supreme Court further held regarding the change of forum in the following words: "It is also true that no litigant has any vested right in the matter of procedural law but, where the question is of change of forum, it ceases to be a question of procedure only. The forum of appeal or proceedings is a vested right as opposed to pure procedure to be followed before a particular forum. The right becomes vested when the proceedings are initiated in the Tribunal or the court of first instance and, unless the Legislature has, by express words or by necessary implication, clearly so indicated, that vested right will continue in spite of the change of jurisdiction of the different Tribunals or forums". The Supreme Court overruled the decisions in 116 ITR 215 - All. (C.I.T. v. Om Sons) and 128 ITR 256 - Kar. (CIT (Addl.) v. M.Y. Chandragi) which were relied upon by the Full Bench in 168 ITR 793, under reference. The Supreme Court overruled the decisions in 116 ITR 215 - All. (C.I.T. v. Om Sons) and 128 ITR 256 - Kar. (CIT (Addl.) v. M.Y. Chandragi) which were relied upon by the Full Bench in 168 ITR 793, under reference. The Supreme Court in Varkey Chacko v. CIT, (1993 (2) KLT 843 = 203 ITR 885) affirmed the decision of Kerala High Court in CIT v. Varkey Chacko (136 ITR 733) which was not followed by the Full Bench in P. I. Issac 's case, (1987 (2) KLT429 =168 ITR 793). The Supreme Court held that "the crucial date, therefore, for purposes of penalty, was the date of such completion". The Supreme Court further held as follows: "Learned counsel for the Revenue submitted that the Income-tax Officer had, in the instant case, satisfied himself and there had been concealment of income on March 27,1972, when he made the order of assessment such satisfaction was a prerequisite to the initiation of the penalty proceedings which were initiated on the same day. On that day, under the amended provisions of S.274(2), the Income-tax Officer had the authority to impose the penalty upon the assessee. Therefore, the High Court had answered the reference correctly. A penalty for concealment of particulars of income or for furnishing inaccurate particulars of income can be imposed only when the assessing authority is satisfied that there has been such concealment or furnishing of inaccurate particulars. A penalty proceeding, therefore, can be initiated only after an assessment order has been made which finds such concealment or furnishing of inaccurate particulars. Who at this point of time, has the authority to impose the penalty is what is relevant. Whoever this authority may be, he is obliged to impose such penalty as was permissible under the law in that behalf on the date on which the offence of concealment of income was committed, that is to say, on the date of the offending return. The two aspects must firmly be borne in mind, namely, who may impose the penalty and in what measure." 33. The argument in the case before us was based on the question whether there was a valid reference in these cases. The Tribunal in paragraph 17 (of their order) found that the assessment order was made on 30-3-1976 and the I.T.O. initiated proceedings for the levy of penalty on the same day. The argument in the case before us was based on the question whether there was a valid reference in these cases. The Tribunal in paragraph 17 (of their order) found that the assessment order was made on 30-3-1976 and the I.T.O. initiated proceedings for the levy of penalty on the same day. The Tribunal found as a matter of record that the I.T.O. informed the assessee by a letter of even date that the case was being referred to the I.A.C. for the purpose of levy of penalty for alleged concealment of income. That letter was despatched on 31-3-1976. A copy thereof was despatched to the I.A.C. also on 31-3-1976. The said copy was received in the office of I.A.C. on 1-4-1976 as is seen evident from the stamp affixed there under. However, the learned counsel appearing on behalf of the assessee submitted that in the circumstances the I.T.O. should have referred the case only on 1-4-1976, and therefore there was no valid reference. 34. In C.I.T. v. Mohinder Lal (168 ITR 101- P & H)(FB) it has been held that reference under S.274(2) of the Act is only a ministerial act. The moment the Assessing Officer passes an order for initiating the penalty proceedings, the proceedings stand initiated and therefore the I.A.C. will continue to have the jurisdiction in the matter which were then pending before him. As held by the Supreme Court neither in express words nor by necessary implication has a Legislature indicated that the jurisdiction of I.A.C. even in pending matters, that is matters which are already referred to him were affected. 33. The Patna High Court in C.I.T. v. Ganga Dayal Sarju Prasad (155 ITR 618) held that the jurisdiction of the IAC to deal with a matter of penalty is to be looked at as on the date of initiation of proceedings and not with reference to subsequent events and such jurisdiction cannot be divested by what happened subsequently. The change of law subsequent to such initiation cannot take away the jurisdiction of IAC. 36. The learned counsel appearing on behalf of the assessee also made a submission that the reference was invalid since it was not received by IAC before 1st April, 1976. This argument-is not sustainable since the jurisdiction of IAC is acquired at the moment the assessing officer passes the order. 36. The learned counsel appearing on behalf of the assessee also made a submission that the reference was invalid since it was not received by IAC before 1st April, 1976. This argument-is not sustainable since the jurisdiction of IAC is acquired at the moment the assessing officer passes the order. As the expression under sub-clause (2) of S.274 gives no room for doubt since the moment the assessing officer is satisfied of the concealment of income, he shall refer the case to the IAC who shall. for the purpose, have all the powers conferred under this Chapter of imposition of penalty. In this context the learned Additional Advocate General for Taxes referred to the decision of the Supreme Court in Upadhyaya v. Shanabhai P. Patel (166 ITR 163) wherein it has been held that: "Once a notice is Issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess". In C.W.T. v, Kundan Lai Behari Lai (99 ITR 581) the Supreme Court while interpreting the word "issued" occurring in S.28(2A) of the Wealth Tax Act held that it would take in the entire process of sending notice as well as service thereof. The Supreme Court also held in that case quoting an earlier judgment in Banarsi Debt v. Income Tax Officer, Calcutta (53 ITR 100) that the expressions "issued" and "served" are used as inter-changeable terms and in the legislative practice of our country they are some times used to convey the same idea. In Jai Charan Lai v. State of U.P. (AIR 1968 SC 5) the Supreme Court while dealing with the requirement of seven clear days intervening between date of despatch of notice and the date of the meeting of a Municipal Council held that "the critical date according to its provisions is the date of despatch of notice and not the date of its receipt". The Supreme Court in Varkey Chacko v. C.I.T. (1993 (2) KLT 843 = 203 ITR 885) held that the relevant date is the date when the Income-tax Officer reached satisfaction that the assessee had concealed his income and made the assessment. On that day the amended provision of S.274(2) was in operation. The Supreme Court in Varkey Chacko v. C.I.T. (1993 (2) KLT 843 = 203 ITR 885) held that the relevant date is the date when the Income-tax Officer reached satisfaction that the assessee had concealed his income and made the assessment. On that day the amended provision of S.274(2) was in operation. Therefore the question whether alter the order of the assessing officer reference order was placed before the IAC and whether it was actually pending with the IAC before 1-4-1976 has no significance in the light of various decisions holding that the relevant date is the date on which the assessment was completed. 37. Learned counsel appearing on behalf of the assessee made yet another submission based on the interpretation of S.6 of the General Clauses Act. According to him the section cannot be invoked in case of ouster of jurisdiction. He strongly relied on the decisions in R. Abdul Azeez v. CIr (Kar.) (128 ITR 547) wherein the Court held that sub-section (2) of S.274 of the Act was omitted by S.65 of the Amending Act and that therefore S.6 of the General Clauses Act cannot be invoked. The Division Bench of the Karnataka High Court while coming to that conclusion followed the Supreme Court decision in Rayala Corporation (P) Ltd. v. Director of Enforcement, New Delhi (AIR 3970 SC 494). The learned Additional Advocate General while adverting to the decision in Rayala Corporation (AIR 1970 SC 494) drew our attention to paragraph 12 of the said judgment. The relevant portion of it is as follows: "The argument of Mr. Sen was that, even if there was a contravention of Rule 132A(2) by the accused when that Rule was in force, the act of contravention cannot be held to be a "thing done or omitted to be done under that rule", so that, after that rule has been omitted, no prosecution in respect of that contravention can be instituted. He conceded the possibility that, if a prosecution had already been started while Rule 132A was in force, that prosecution might have been competently continued. Once the Rule was omitted altogether, no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to agree with the submission of Mr. Once the Rule was omitted altogether, no new proceeding by way of prosecution could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to agree with the submission of Mr. Sen that the language contained in clause 2 of the Defence of India (Amendment) Rules. 1965 can only afford protection to action already taken while the rule was in force, but cannot justify initiation of a new proceeding, which will not be a tiling done or omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist. On this interpretation, the complaint made for the offence under R.132A(4) of the D.I.Rs., after 1st April, 1965 when the rule was omitted, has to be held invalid." (emphasis added) The Supreme Court is of the opinion that under the Rules no further application of the rule can be permitted by instituting a new prosecution in respect of something already done. In that context the Supreme Court held that S.6 of the General Clauses Act cannot apply on the omission of rule 132A of the D.I.Rs. The observation of the Supreme Court in not allowing the continuance of proceedings has to be considered in the context of the facts of the particular case. The learned counsel for the assessee also relied on the observation of the Supreme Court in C.I. T. v. Dhadi Sahu (199 ITR 610) regarding the distinction of divesting and ousting of jurisdiction. 38. The argument of the learned counsel is that in case of ousting of jurisdiction the IAC will not have the authority to pass the orders. But the case before us is that at the time when the reference was initiated the IAC had jurisdiction and the question is whether he will continue to have the jurisdiction even after the date. The judgment of the Karnataka High Court in 128 ITR 547 holding that IAC will not have the jurisdiction based on the interpretation of S.6 of the General Clauses Act and the judgment in Rayala Corporation (AIR 1970 SC 494) have been reversed impliedly in 199 ITR 611. By the Taxation Laws (Amendment) Act, 1975 with effect from 1st April, 1976, subsection (2) of S.274 was deleted. By the Taxation Laws (Amendment) Act, 1975 with effect from 1st April, 1976, subsection (2) of S.274 was deleted. The scope and effect of the amendment was explained by the Board in a circular No.204 dated 24th July, 1976 which is as follows: "Procedure in regard to imposition of penalty- Section 274-65. Hitherto, in a case in which the concealment of income exceeded Rs. 25,000/-, the penalty order under S.271(1)(iii) was passed by the Inspecting Assistant Commissioner. As explained in para.61.6 above, the penalty orders in such cases will now be passed by the Income-Tax Officer with the prior approval of the Inspecting Assistant Commissioner. Sub-section (2) of S.274 which provided for the imposition of concealment penalty by the Inspecting Assistant Commissioner has accordingly been deleted." 39. The argument of the learned counsel for the assessee is relating to the effect of the amendment and not repeal. The provisions relating to the procedure under S.274 as originally enacted in the year 1961 and 1970 have since been amended. The effect of such an amendment will have to be either omission, insertion or substitution. The effect of repealing of an enactment is provided under S.6 of the General Clauses Act which says that repealing of an enactment shall not affect any right, privilege etc. incurred under any enactment so repealed, or affect any investigation, legal proceedings etc. and further provides that any such investigation, legal proceeding or remedy may be instituted, continued or enforced as if the repealing Act or Regulation had not been passed. Section 6 provides for the continuance of the investigation and initiation of fresh proceedings. Section 6A of the General Clauses Act provides that whenever an Act is repealed by any enactment, the amendments made by omission, insertion or substitution shall be continued and the repealing of the Act will not have any effect on those amendments. By a closer look of these provisions, it is clear that an Act can be amended by omission, insertion or substitution and even though the original Act is repealed, those amended provisions would continue unless different intention appears from the repealing Act. Therefore Taxation Laws (Amendment) Act, 1975 does not expressly bar the continuance of the proceedings initiated already. The distinction sought to be made on the expression "omission" does not improve the case of the petitioner. Therefore Taxation Laws (Amendment) Act, 1975 does not expressly bar the continuance of the proceedings initiated already. The distinction sought to be made on the expression "omission" does not improve the case of the petitioner. Whether it is a deletion or omission it is an amendment and the amendment ceased to be a procedure and has not taken away the jurisdiction of the IAC retrospectively. The Amending Act does not make the proceedings pending before the authorities, abate. It is clear that IAC to whom the case was referred prior to April 1, 1976 had jurisdiction to impose the penalty. 40. In view of what has been stated above I hold that there was a valid reference and the order of the Tribunal holding that IAC has no jurisdiction is illegal. The question is, therefore, answered in favour of the revenue and against the assessee. 41. Regarding the first question, viz. whether on the facts and circumstances of the case the Tribunal is right in holding that penalty is exigible under S.271(1)(c) of the I.T. Act for the assessment year 1973-74, the relevant provision during the relevant period is the explanation to S.271(1)(c)(iii). In the explanation a burden is placed on the assessee to the effect that unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect, he would be deemed to have concealed the particulars of his income for the purpose of S.271(1)(c). The Tribunal which went into the question in paragraphs 8 and 9 has given a categorical finding that the assessee had not at all disclosed the gains arising from the same in the return filed by him. Ultimately the Tribunal found that in these circumstances the contention that the assessee had not concealed any income is devoid of any merits and cannot be accepted. The assessee has not offered any expiration for the omission. Therefore it has to be held that penalty is exigible for concealment of income under S.271(1)(c) of the Income Tax Act, 1961, The question whether the assessee has discharged his burden is a conclusion of fact and not of a question of law. This has been held so by the Supreme Court in CIT v. Mussadilal Ram Bharose (165 ITR 14). The Supreme Court further held that the explanation must be acceptable to the fact finding body. This has been held so by the Supreme Court in CIT v. Mussadilal Ram Bharose (165 ITR 14). The Supreme Court further held that the explanation must be acceptable to the fact finding body. The Supreme Court also held mat the Tribunal's conclusion on relevant and sufficient material that the respondent had discharged its onus to prove that the difference was not owing to gross or wilful neglect or fraud, was a conclusion of fact and no question of law arose. In CIT v. Govindankutty Menon (178 ITR 509) a Division Bench of this Court held that unless it is shown mat the failure to return the correct income has not arisen on account of any fraud or gross or wilful neglect on the part of the assessee shall be deemed to have concealed the particulars of the income. It is only a presumption. This interpretation can be discharged either by independent evidence led during the penalty proceedings or by a closer scrutiny or appraisal of existing facts and data available. The findings arrived at were pure findings of fact and no question of law arose from it. 42. The learned Additional Advocate General for Taxes submitted that the question as framed is self destructive in the sense that on the facts and circumstances of the case as found by the Tribunal, the penalty is exigible. Therefore, the question does not arise for consideration by this court. In that context he referred to the Supreme Court decision in Karam Chand Thapar & Bros. P. Ltd, v. CIT (80 ITR 167) wherein the Court held that the only question that the High Court was called upon to determine was whether, on the facts found by the Tribunal, the sum of Rs. 18 lakhs was a revenue receipt, and it was not permissible for the High Court to disturb the findings of fact reached by the Tribunal. 43. In CJT v. Bhageeratha Engg. Ltd. (199 ITR 12) the Supreme Court held that while affirming the decision of the High Court that the contention of the Department that the construction activity carried on by the respondent could not be said to be an industrial undertaking became irrelevant as the Department had not challenged the finding of the Tribunal. In Commr. Ltd. (199 ITR 12) the Supreme Court held that while affirming the decision of the High Court that the contention of the Department that the construction activity carried on by the respondent could not be said to be an industrial undertaking became irrelevant as the Department had not challenged the finding of the Tribunal. In Commr. of Incometax v. Kamal Singh Rampuria (75 ITR 157) the Supreme Court held that in the absence of a proper question about the validity of the findings of fact of the Tribunal, the High Court was in error in re-appraising the evidence before the Tribunal and in interfering with its finding. The Supreme Court further held that it is well established that the High Court is not a court of appeal in a reference under S.66 of the Act, and it is not open to the High Court in such a reference to embark upon a re-appraisal of the evidence and to arrive at findings of fact contrary to those of the Appellate Tribunal. It is true that the finding of fact will be defective in law if there is no evidence to support it or if the finding is unreasonable or perverse. But in the hearing of a reference under S.66 (under 1922 Act) of the Act it is not open to the assessee to challenge such a finding of fact unless he has applied for a reference of the specific question under S.66(1). In a reference the High. Court accepted the findings of fact reached by the Appellate Tribunal and it is for the party who applied for a reference to challenge those findings of fact, by an application under S.66(1). If the party concerned has failed to file an application under S.66(1) expressly raising the question about the validity of the findings of fact, he is not entitled to urge before the High Court that the findings were vitiated for any reason. 44. A Division Bench of this Court in Haji A. Abdul Khader Sahib v. The Commissioner of Income-tax, Kerala (ILR 1975 (2) Ker. 44. A Division Bench of this Court in Haji A. Abdul Khader Sahib v. The Commissioner of Income-tax, Kerala (ILR 1975 (2) Ker. 81) held in para.5 as follows: "It is now very well settled by a long line of decisions of the Supreme Court that the expression facts and circumstances that normally precede or preface any question that is referred to this Court must take in not facts and circumstances found by this Court but facts and circumstances found by the Tribunal in its order. It is equally well settled that if there is no specific challenge of any finding of fact by the Tribunal by an appropriate question being raised and referred to this Court, this Court is precluded from considering whether that finding entered by the Tribunal should stand or not". In these circumstances the question referred by the Tribunal is answered in affirmative in favour of the revenue and against the assessee. 45. Regarding I.T.R. No. 107 of 1983 the questions referred were mentioned in the beginning paragraph of this judgment. The first question that arose for consideration was regarding the quantum of penalty, viz. whether the amount in respect of which the assessee has concealed the income in the return filed by him for the assessment year is to be reckoned after allowing deductions under S.80B of the Income Tax Act, 1961. The Tribunal after considering the matter came to the conclusion that the assessee has concealed the particulars in respect of only that income which should have been disclosed in the return, viz. the capital gains arising from the transaction computed in accordance with the provisions of S.80T and S.48 of the Act. The contention raised on behalf of the Revenue is that deduction under S.80T could be allowed only after setting off the capital loss of Rs. 8,355/- relating to the assessment year 1972-73 and if so done such deduction would be only Rs. 38,790/- as worked out by the Income Tax Officer and hence the assessable capital gains would be Rs. 71,110/-. The Tribunal distinguished the decision of this Court in CIT v. India Sea Foods (105 ITR 708). 8,355/- relating to the assessment year 1972-73 and if so done such deduction would be only Rs. 38,790/- as worked out by the Income Tax Officer and hence the assessable capital gains would be Rs. 71,110/-. The Tribunal distinguished the decision of this Court in CIT v. India Sea Foods (105 ITR 708). The question regarding deduction of long term capital losses brought forward from earlier assessment years should be first set off against the long term capital gains, was decided by the Supreme Court in H.H. Sir Rama Varma v. CIT (205 ITR 433) as follows: "Long term capital losses brought forward from earlier assessment years have to be first set off against the long term capital gains of the current assessment year before the deduction contemplated by S.80T of the Income-tax Act, 1961, is allowed. In other words, the relief under S.80T is to be given only for the amount of long-term capital gains of the current assessment year after the long-term capital loss of the earlier years brought forward is set off." The Supreme Court in this decision affirmed the decision of this Court in H.H. Sir Rama Varma v. C.I.T. (129 ITR 156). 46. In view of the Supreme Court decision the conclusion reached by the Tribunal is erroneous. Consequently I answer the question in favour of the revenue and against the assessee and hold that deductions under S.80T could be allowed only after setting off the capital loss. In the light of the conclusion question Nos.2 and 3 are also answered in favour of the revenue and against the assessee. Pareed Pillay, CJ. I have gone through the judgments of Mohammed, J. and Shanmugam, J. I agree with Mohammed, J. In view of the majority decision, we answer the second question of law raised at the instance of the assessee and third question at the instance of the Revenue, in the negative and in favour of the assessee and against the Revenue. We decline to answer other questions raised both by the assessee and the Revenue. A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Incometax Appellate Tribunal, Cochin Bench.