P L D 1969 Dacca 585 (PLP)

"When the matter went up in appeal the Appellate Assistant Commissioner held that no penalty could be imposed under section 28(1) (b) but imposition of penalty under section 28(1) (a) was quite correct. He, however, reduced the quantum of penalty to 10 % of the tax payable." From the statement quoted above it is, clear that the Appellate Assistant Commissioner has imposed the penalty under section 28(1)(a) which he considered to be correct and therefore the penalty now imposed by him is deemed to be under section 28(1)(a) of the Act. In these circumstances, therefore, a further question arises as to whether this order can be sustained in law. We therefore framed a further question in the following terms: ‑ "Whether in the facts and in the circumstances of the case the imposition of penalty under section 28(1)(a) of the act by the Appellate Assistant Commissioner was legal 7" This question, we are also of opinion must also be answered in the negative. The Appellate Assistant Commissioner was hearing an appeal under section 31 of the Act. Subsection (4) of section 31 enumerates various orders that the Appellate Assistant Commissioner may make while hearing an appeal. We are concerned with clause (f) of subsection (4) of section

31. Material part of subsection (4) is as follows: ‑ "(4) The Appellate Assistant Commissioner may, in the case of an order of assessment, . . . . . . . . . . . or, in the case of an order under section 28 or sub section (6) or section 44‑E or subsection (5) of section 44‑F or subsection (1) of section 46 ; (f) cancel such order or vary it so as either to enhance pr reduce the penalty ;" Mr. Afzalul Haque, learned Advocate for the Commissioner strenuously argues that the Appellate Assistant Commissioner while hearing an appeal could make the impugned order for he has the authority to impose penalty under clause (f) of subsection (4) of section 31 of the Act. Mr. Hussain, learned Advocate for the assessee however argues that while sitting on appeal against an order the Appellate Assistant Commissioner cannot vary it unless he finds that the order of the penalty was legal. He also argues that he was proceeding under section 31 and not under section 28 of the Act. His further contention is that in this case the Appellate Assistant Commissioner could not vary the order unless he found that a legal order was in existence and if he cancelled the order there was nothing to vary it. Mr. Haque, learned Advocate for the Commissioner on the other hand says that while sitting as an Appellate autho rity he had wide powers to make any order that was necessary and he has also drawn our attention that under section 28(1)(a) the Appellate Assistant Commissioner could himself impose a penalty and therefore the penalty now imposed cannot be called in question. Short answer to the contention of Mr. Haque is that in this case the Appellate Assistant Commissioner did not himself initiate proceeding under section 28(1). He was hearing an appeal against an order of penalty imposed by the Income‑tax Officer. The Income‑tax Officer did not impose penalty under section 28(1)(a) but he imposed penalty under Both the clauses (a) and (b) section 28(1). The Appellate Assistant Commissioner has not maintained this order and he has imposed a fresh penalty and clause (f )does not authorise making of a fresh order without initiating proceeding under section 28(1) and therefore the order made by the Appellate Assistant Commissioner is not within the ambit of sub section (4) of section

31. There has been no order under clause (a) and therefore no variation of a non‑existing order can be made. Mr. Afzalul Haque placed his reliance in the case of Komlapat Motilal v. Commissioner of Income‑tax, U. P, and V. P. ((1962) 45 I T R 200). In that case the Supreme Court of India held that Section 28 of the Income‑tax Act enables the Appellate Assistant Commissioner to take action under that section if in the course of any proceeding under the Act he is satisfied that any person, has, inter alia concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. In this case we have merely said that the Appellate Assistant Commissioner has varied and modified an order which ho himself found to be illegal. In other words it was non‑existent in the eye of law. That being so the view taken in the case of the Supreme Court of India has no bearing at all. The next case relied on by the learned Advocate for the Revenue is the decision of the Allahabad High Court in the case of Haji Ghulam Hussain v. Commissioner of Income tax, United Provinces (1). In that case it was held that the Appellate Assistant Commissioner could impose a penalty under section 28(I)(a) of the Income‑tax Act. We have already said that such a power is available to the Appellate Assistant Commissioner. But in the case before us he has varied the illegal order of the Income‑tax Officer. For the same reason, this case is also of no assistance to the learned Advocate. For the reasons stated above, we answer both the questions as framed by us in the negative and leave the parties to bear their own costs. A. H. KHAN, J.‑J agree. S. Q. Question answered in the negative.