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Issues involved: The judgment addresses the questions of whether the Appellate Tribunal was justified in interfering with the order passed by the Appellate Assistant Commissioner and whether the order of remit passed by the Appellate Assistant Commissioner was infirm or liable to be interfered with by the Appellate Tribunal.
Summary: The respondent, an assessee to income-tax, had a penalty levied on them under section 271(1)(a) of the Income-tax Act for the year 1976-77. The Appellate Assistant Commissioner set aside the penalty order with directions for a fresh order to be passed after giving the assessee an opportunity to be heard. However, the Tribunal later deleted the penalty. The Revenue sought to refer questions of law to the court, which were initially declined but later reformulated and directed to be referred to the court. The Tribunal canceled the order of the Appellate Assistant Commissioner, citing that the first appellate authority does not have the power to cancel the order appealed against and order a remit with directions under section 251(1)(b) of the Act. The court examined the powers of the first appellate authority under section 251 of the Income-tax Act, highlighting the limitations in appeals against orders imposing penalties. The court held that the first appellate authority does not have the power to set aside the order appealed against and order a remit with directions in cases of penalties, as specified under section 251(1)(b) of the Act. Therefore, the Tribunal's decision to cancel the penalty levied was deemed valid and justified. Both questions were answered in favor of the assessee, and the income-tax reference was disposed of accordingly. A copy of the judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench.
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