COMMISSIONER OF INCOME TAX,BANGALORE vs SMT. R. SHARADAMMA

The Supreme Court ruled that the Inspecting Assistant Commissioner lacked jurisdiction to levy penalties under Section 271(1)(c) of the Income Tax Act after the amendment of Section 274(2) by the Taxation Laws (Amendment) Act, 1975, which came into effect on April 1, 1976. The Court held that any penalty proceedings pending before the Inspecting Assistant Commissioner as of that date could not continue, thereby affirming the Karnataka High Court's decision in R. Abdul Azeez v. Commissioner of Income Tax. The appeal was dismissed in favor of the assessee, confirming the High Court's ruling against the Revenue.