1984 (3) TMI 38 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Tribunal to remand a case relating to penalty.
2. Powers of the Tribunal while deciding penalty appeals under Section 42 of the Karnataka Agricultural Income-Tax Act, 1957.
3. Authority to levy penalty on super-tax under the Act.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal to Remand a Case Relating to Penalty:
The petitioner challenged the Tribunal's jurisdiction to remand penalty cases to the assessing authority for fresh orders. The Tribunal's power under Section 34(4) of the Karnataka Agricultural Income-Tax Act, 1957, was scrutinized in light of Supreme Court precedents. The Supreme Court in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232 and CIT v. Chenniappa Mudaliar [1969] 74 ITR 41 elucidated that the Tribunal's power to pass orders "as it thinks fit" is co-extensive with the first appellate authority's powers, excluding enhancement. Therefore, the Tribunal's jurisdiction is restricted to the subject-matter of the appeal, and it cannot remand cases to the assessing authority if the Deputy Commissioner lacks such power.

2. Powers of the Tribunal While Deciding Penalty Appeals Under Section 42:
The Tribunal's powers are analogous to those of the Deputy Commissioner under Section 32 of the Act. Section 32(5)(a) allows the Deputy Commissioner to confirm, reduce, enhance, annul, or set aside assessments and direct fresh assessments. However, Section 32(5)(b) limits the Deputy Commissioner, in the case of other orders (including penalties), to confirming, canceling, or varying the order without the power to remand. Consequently, the Tribunal cannot remand penalty cases to the assessing authority, as its powers are circumscribed by those of the Deputy Commissioner.

3. Authority to Levy Penalty on Super-Tax:
The petitioner argued that the Act does not authorize penalties for default in super-tax payment. "Super-tax" is defined under Section 2(vv) and levied under Section 53A of the Act, distinct from agricultural income-tax under Section 3. Penalties under Section 42 apply to defaults in agricultural income-tax, not super-tax. The Tribunal's Full Bench upheld the power to levy penalties on super-tax, but this view was challenged. The High Court clarified that penalties under Section 42 are limited to defaults in agricultural income-tax payments, making penalties on super-tax unauthorized.

Conclusion:
The High Court allowed the revision petitions, setting aside the Tribunal's order and remitting the matters for fresh disposal. It emphasized that the Deputy Commissioner must dispose of penalty matters without remanding them to the assessing authority, as the Tribunal's powers are aligned with those of the Deputy Commissioner under the Act. The Tribunal's decision to remit the matter to the assessing authority was beyond its jurisdiction, reaffirming the distinction between assessment orders and other orders, including penalties. No costs were ordered in the circumstances of the case.