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TMI Blog1977 (4) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... preceding year had been delayed. He had held that in the preceding year the assessee had no reason to delay the return beyond 31st March, 1968. He was, therefore, of the opinion that granting allowances for the completion of the accounts after that date the assessee could have had reasonable cause only upto 31st Dec., 1968. He, therefore, held that the further delay of fifteen months invited the imposition of penalty which he calculated at Rs. 3,680. 3. The assessee appealed to the AAC and contended that the entire period of delay should be condoned as if due to reasons beyond the control of the assessee. In the alternative, it was contended that the computation of penalty not being in accordance with law, it must be considered to be beyond the jurisdiction of the Income-tax Officer and cancelled. The AAC confirmed the finding of the Income-tax Officer that the delay of fifteen months was without reasonable cause. He also found that there was a mistake in the computation of the penalty, but he did not accept the contention that the order was thereby invalid. He, therefore, directed the Income-tax Officer to recompute the penalty after verifying the actual tax payable by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return for that year beyond 31st March, 1968. He has accordingly allowed the assessee some time for making of return of this assessment year from 31st March, 1968. This starting point, however, ignores the actual fact that the return for the preceding assessment year was filed only on 5th August, 1968. It will also mean that the assessee will be inflicted with penalty for the same period in two assessment years and it will ignore the fact that the delay in the preparation of the return for the earlier year, was in fact, a cause for the delay in the preparation of the return for the assessment year. We are, therefore, the opinion that the assessee would be required to explain the further delay only from 5th Aug, 1968. The assessee has not brought on record specific evidence relating to the circumstances we have to necessarily make an estimate of the reasonable time that might have been required by the assessee to finalise the returns after 5th Aug 1968. We find that the return for the subsequent assessment year 1967-68 was filed on 22ND June, 70 accompanied by an audited account dated 31st July, 1968 though that audited account related only to one branch. From this it appears tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the imposition of penalty was not in accordance with law it should be considered to be invalid and cancelled. 8. On the other hand it was contended on behalf of the revenue that the argument of the assessee will lead to unjust results, such as the cancellation of penalties impossible for admitted defaults merely because there is some clerical or arithmetical error in the calculation of the penalty. Reliance was placed on the decision of the Gauhati High court in the case of Smt. Ratna Kanti Bhuyan(3) and it was submitted that the quantum of penalty having been statutorily fixed and Income-tax Officer having no duty to indicate even the basis of the calculation the AAC was entitled to direct the Income-tax Officer to recompute the penalty in accordance with law. It was further pointed out that where the assessed tax is reduced or varied on appeal against the assessment the quantum of penalty would undergo a consequential change which applied that the AAC had jurisdiction to consider the correctness of the assessed tax in the computation of penalty. It was thus submitted that the contention of the assessee was not tenable. 9. On a careful consideration of the rival submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of the Act. This expression has been used in conjunction with enhancement of reduction of the penalty. It is interesting to note that even under s. 154, the Act recognises the enhancement or otherwise increasing the liabilities of the assessee. Thus it is recognised that the penalty may be enhanced either by an order of rectification or by an order on appeal. More over s. 251(1)(b) is common to all penalty appeals and in the case of other penalties the quantum also is in the discretion of the authority imposing the penalty [see s. 271(1)(c). Therefore there is nothing to circumscribe or limit the power of variation granted under s. 251(1)(b) of the Act to the discretion given in certain sections for the imposition of penalty for s. 251(1)(b) applied to all appeals against any order of penalty and is not limited to those orders in respect of imposition of penalties where discretion is conferred with regard to quantum of penalty. On a plain reading of the section we are unable to accept the argument of the assessee that the power to vary the penalty cannot be exercised where the quantum of penalty has been erroneously calculated by the Income-tax Officer. 12. In Appreciating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgoes a variation or is subject to appeal in the assessment, the assessee would be entitled to raise that component in the appeal against penalty order also. In such cases the AAC is bound to decide whether the assessed tax has been correctly taken by the Income-tax Officer in computing the penalty. If the AAC could thus entertain the appeal on the assessed tax where it is only a subject matter of appeal and was not in fact incorrect or erroneous at the time of imposition of penalty, we fail to see way it could not be so agitated when it is demonstrably erroneous on the face of the record. 14. The acceptance of the contention of the assessee that the AAC cannot very the assessed tax taken by the Income-tax Officer where it is shown to be erroneous would lead to unjust results either way. It the quantum of penalty cannot be a subject matter of appeal at all then logically the AAC would be precluded from considering whether it is in accordance with law and even entertaining the argument of the assessee that the order of penalty should, therefore, be cancelled. If an order of penalty should be considered to be invalid merely because there is some error in the computation of the quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated. The Hon'ble High Court confirmed the view of the Tribunal that such an order was vague and untenable. In that judgment the alternative ground of the assessee that the penalty was not in accordance with law because the amount of penalty was lower than what is should have been, was disposed of by referring to the earlier decision of the same High Court in the case of Assam Travel Shipping Service(1). In the case M/s. Assam Travel Shipping Service(1). The question was whether the Appellate Tribunal was justified in upholding the order of the AAC cancelling the order of penalty on the ground that they were not in accordance with law. It was not disputed in that case that the order of penalty was not in accordance with law, the quantum of penalty being less than that imposable by the statute. The Tribunal had cancelled that order on the ground that it had no power to enhance the penalty and could not, therefore, bring it in accordance with law. The High Court pointed out that the question of law referred was not to the effect whether the Tribunal was justified in not remanding the case to the AAC and, therefore, on the admitted facts of the case the Tribunal could not be sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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