1. K. A. THANIKKACHALAM, J.---At the instance of the Department, the Tribunal has referred the following question for, the opinion of this Court under section 256(1) of the Income Tax Act, 1961: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in holding that the Inspecting Assistant Commissioner had no jurisdiction to impose the penalty under section 271(1)(c) in this case and accordingly in cancelling the penalty of Rs.26, 404/51 ,553 for the assessm ent year 1966-67/1971---72?"
2. The point for consideration is whether the Inspecting Assistant Commissioner had jurisdiction to impose penalty under section 271(1 j(c) in this case for the assessment years 1966-67 and 1971-72.
3. The Tribunal relying upon the decision of the Karnataka High Court in the case of R. Abdul Azeez v.
4. CIT (1981) 128 ITR 547, held that there was no jurisdiction on the part of the Inspecting Assistant Commissioner after amendment to levy penalty under section 271(1)(c) of the Act in the present case especially after the amendment to section 274 of the Income-tax Act with effect from. April 1, 1976, as per the Taxation Laws (Amendment) Act, 1975, which has taken away the jurisdiction of the Inspecting Assistant Commissioner. The decision of the Karnataka High Court was reversed by the Supreme Court in the case of CIT v. Smt. R. Sharadamma (1996) 219 ITR 671, wherein held that (headnote): "Once the Inspecting Assistant Commissioner was thus seized of the matter, he did not lose seizin there of on account of the deletion of subsection (2) of section 274 by the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. The Inspecting Assistant Commissioner did not lose the jurisdiction to continue with the proceedings pending before him on March 31, 1976. He was entitled to continue with those proceedings and pass appropriate order according to law." <p.m></p.m>