TMI Blog1992 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... n are against the judgment of the Gauhati High Court, dated June 22, 1976, in Income-tax Reference No. 17 of 1974 deciding a common question of law relating to the assessment years 1963-64 and 1964-65. The common question of law referred to the High Court for its decision under section 256(1) of the Income-tax Act, 1961, was as under (see [1977] 110 ITR 359, 360) : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the Appellate Assistant Commissioner cancelling the penalty orders of the Income-tax Officer under section 271(1)(a) of the Income-tax Act, 1961, relating to the assessment years 1963-64 and 1964-65, on the ground that the penalty orders were illegal and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. of this comes to Rs. 4,068 per month. But the delay in the submission of the return is for a period of 23 months. The penalty in this case, therefore, would be at Rs. 93,564 whereas the Income-tax Officer has imposed a penalty of Rs. 70,118 only. This is, therefore, clearly contrary to the provision of section 271(1)(a). " The Appellate Assistant Commissioner having reached the conclusion that the Income-tax Officer had committed this illegality, instead of taking necessary proceedings in accordance with law for avoiding this loss of revenue, made an order cancelling the entire penalty imposed by the Income-tax Officer. The Department then went up in appeal to the Income-tax Appellate Tribunal. The Tribunal affirmed the finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the quantum of penalty between the minimum and maximum limits prescribed. The statutory minimum and maximum limits of penalty imposable under section 271 have to be observed by any authority imposing the penalty. In the instant case, the penalty was imposed contrary to the provisions of sub-section (2) of section 271. That being so, the order of the Income-tax Officer cannot be said to be in accordance with law and, therefore, it is not sustainable in law. The penalty imposable in both the assessment years was much higher than the penalty imposed by the Income-tax Officer. It is not disputed before us that the Tribunal has no right to enhance the penalty. The question of law referred to us is also not to the effect whether the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal clearly held that the computation of penalty made by the Income-tax Officer was not in accordance with law and that the correct computation of penalty was also made while taking that view. The conclusion clearly reached was that the computation of penalty had to be made in accordance with section 271(1)(a) read with sub-section (2) of section 271 of the Act. The correct figure arrived on that basis on the facts of this case was also indicated. On that conclusion, the only question arising out of the Tribunal's order was whether the Tribunal had no other alternative except to dismiss the Department's appeal and thereby affirm the order of the Appellate Assistant Commissioner cancelling even the lesser penalty imposed by the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the view that he had no power to enhance the penalty in accordance with law on reaching the conclusion that the computation of penalty made by the Income-tax Officer was illegal, and that he could only cancel even the lesser penalty which had been imposed by the Income-tax Officer. It has now to be seen whether the question of law referred to the High Court under section 256(1) of the Act covered this aspect. Apart from the fact that the High Court is empowered to reframe a question of law arising out of the Tribunal's order in case the framing of the question is not proper, we have no doubt that the question of law even as framed was wide enough to include this aspect which arises out of the Tribunal's order leading to the reference m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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