K.N. Miska, J.
1. Assessee, a firm, has applied under Section 256(2) of the Income-tax Act of 1961 (hereinafter referred to as 'the Act'). for a direction to the Appellate Tribunal to state a case and refer the following questions for opinion of the court:
'(1) Whether, in the facts and circumstances of the case, the Appellate Assistant Commissioner under Section 251(1)(b) of the Income-tax Act, 1961, had power and jurisdiction to validate and enhance the order of penalty imposed under Section 271(1)(a) which is not in conformity with the provisions of the Income-tax Act, 1961, and is valid in law and
(2) Whether, in the facts and circumstances of the case, the penalty imposed under Section 271(1)(a) of the Income-tax Act, 196], by the Income-tax Officer should be treated as a mere mistake and considered legally rectifiable under Section 251(1)(b) of the Income-tax Act, 1961
2. For the assessment year 1966-67, the assessee was required to submit its return on or before 30th of September, 1966. The return was filed on April 4, 1967, i.e., beyond six months from the date when the return was due. The Income-tax Officer initiated a proceeding for imposition of penalty under Section 271(1)(a) of the Act and required the assessee to offer explanation for the delay. The assessee did not give any explanation. The Income-tax Officer imposed penalty of Rs. 2,570.
3. In assessee's appeal before the Appellate Assistant Commissioner, the appellate authority noticed that the Income-tax Officer had committed error in calculation of the period of default and had also overlooked the provision of Section 271(2) of the Act. Accordingly, the appellate authority issued notice of enhancement and rectified the mistake by enhancing the penalty to a sum of Rs. 4,290 involving an extra demand of Rs. 1,720. Assessee's appeal before the Appellate Tribunal was dismissed and in due course the Tribunal refused to state a case when moved by the assessee.
4. It is conceded by Mr. Ray for the assessee that there was default and the Income-tax Officer had jurisdiction to visit the assessee with penalty. It is also conceded that the levy of penalty as imposed by the Income-tax Officer was not in accordance with law provided in Section 271 of the Act. It is not disputed that the first appellate authority had jurisdiction to enhance the penalty after complying with the requirements of law. It is not Mr. Ray'3 contention that the first appellate authority failed to follow the requirements of the law for enhancing the demand of penalty. According to the learned counsel the imposition of penalty by the Income-tax Officer was a nullity and, therefore, the order which was a nullity could not be rectified by the appellate authority.
5. In support of his contention Mr. Ray cited two decisions. The first one is the case of Padgilwar Brothers v. Commissioner of Income-tax : [1971]81ITR258(Bom) . The Bombay High Court was considering in the facts of the case the validity of imposition of penalty under Section 271(1)(c) of the Act. It is conceded by Mr. Ray that there was no indication in the decision of the High Court that the default committed by the Income-tax Officer rendered his order to be a nullity. The second decision relied upon is the case of Kamlapat Motilal v. Commissioner of Income-tax : [1962]45ITR266(SC) . The Supreme Court was examining the case of imposition of penalty under Section 28 of the Income-tax Act of 1922. Therein the Supreme Court observed that where the Income-tax Officer had failed to take action for imposition of penalty by initiating a proceeding, it is open to the appellate authority to initiate such a proceeding for the first time. Undoubtedly, both the Income-tax Officer as also the first appellate authority have been conferred jurisdiction to initiate a proceeding for imposition of penalty.
6. Once it is conceded that the appellate authority had jurisdiction to rectify the defect appearing in the order of the Income-tax Officer and in case rectification required enhancement, the first appellate authority having that power, an enhancement made by the first appellate authority by following the requirements of law cannot be challenged. We are not prepared to accept the contention of Mr. Ray that the order imposing the penalty by the the Income-tax Officer was a nullity. Undoubtedly, there was a mistake and, therefore, an error had crept into the order imposing the penalty. The appellate authority was wholly within jurisdiction to rectify it. That has been done in this case. There is hardly any scope to be aggrieved by what has been done by the appellate authority ; much less does a question of law arise out of the order. We, accordingly, reject the application but make no direction for costs.
Panda, J.
7. I agree.