COMMISSIONER OF INCOME TAX Vs. RAM MURTI

JUDGEMENT

(1.) THE assessee, Ram Murti, voluntarily submitted his returns for the assessment years 1957-58 to 1962-63, all on the same date March 23, 1962. THE Income-tax Officer took proceedings for imposing a penalty for default of the notice under Section 22(1) of the Indian Income-tax Act, 1922, in respect of the different assessment years. On August 31, 1963, he made an order under Section 271(1)(a) of the Income-tax Act, 1961, imposing a penalty of Rs. 2,209 on the ground that the assessee had not filed the returns of income in time. On appeal for the assessment year 1960-61, the Appellate Assistant Commissioner of Income-tax, although finding that the assessee was guilty of default in complying with the notice under Section 22(1) of the Act of 1922, and that, therefore, Section 271(1)(a) of the Act of 196'1 was attracted, reduced the penalty to Rs. 1,800. THE assessee proceeded in further appeal to the Income-tax Appellate Tribunal. THE Appellate Tribunal also held that the assessee had committed a default under Section 271(1)(a) and that a penalty should be imposed under that provision. However, it reduced the penalty further to a nominal sum of Rs. 200 only. It was urged on behalf of the revenue before the Tribunal that the rate of 2% for every month of default mentioned in Section 271(1)(i) of the Act of 1961 as the rate for imposing a penalty in respect of a default under Section 271(1)(a) could not be varied and the Tribunal was bound to apply that rate and it could not reduce the penalty to a figure below that computed on the basis of that rate. THE contention was rejected by the Appellate Tribunal. At the instance of the Commissioner of Income-tax, the Tribunal has referred the following question for the opinion of this court:

(2.) THE contention on behalf of the revenue is that the Tribunal, once it found that the case attracted the penalty contemplated by Section 271(1)(i), was bound to impose a penalty at the rate of 2%. It had no jurisdiction to impose a penalty which fell below the amount computed on the basis of that rate. On the other hand, it is urged for the assessee that the provision fixing the rate in Section 271(1)(i) is binding upon the Income-tax Officer only and does not bind the Income-tax Appellate Tribunal which has power under Section 254(1) of the Act of 1961 to pass such order as it thinks fit. It is also urged, in the alternative, that there is a discretion in the Income-tax Officer when he exercises the power under Section 274(1)(i) to impose or not to impose a penalty for default in filing the return within time, and if that discretion is available to him it cannot be said that he cannot reduce the amount of penalty below the level mentioned in Section 271(1)(i). In our opinion, neither of the contentions urged on behalf of the assessee is well-founded. It seems to us that the Tribunal, while disposing of an appeal in a case arising out of a penalty proceeding under Section 271(1) has the same limits set to its jurisdiction as govern the jurisdiction of the Income-tax Officer. THEre can be no dispute that the jurisdiction exercised by the Tribunal is an appellate jurisdiction. THE general principle is that an appellate court or Tribunal has only that jurisdiction which was possessed by the court or Tribunal from whose order the appeal has arisen. No doubt, this general principle is subject to legislative provision which may modify it. But, in the absence of such legislative provision, the appellate authority can do only that which the original authority could do. We think the proposition is well-settled and that it is not necessary to cite any authority in support of it. In the light of that general principle, therefore, it becomes necessary to ascertain the jurisdiction of the Tribunal, THE powers of the Tribunal are set out in Section 254(1), which provides :

(3.) WE may with advantage refer to the observations of the Calcutta High Court in Commissioner of Income-tax v. A.K. Das, [1970] 77 I.T.R. 31, 59 (Cal ), in a case of penalty under Section 271(1)(iii) of the Act. The learned judges observed :