JUDGMENT Satish Chandra, J.
1. For the assessment year 1963-64, the assessee returned an income of Rs. 2,689. The Income-tax Officer, however, completed the assessment on a total income of Rs. 30,000 by an order dated 28th February, 1964. He also initiated penalty proceedings. Since he was of the opinion that the penalty imposable exceeded Rs. 1,000, he referred the matter to the Inspecting Assistant Commissioner. The Inspecting Assistant Commissioner heard the assessee, and on 4th November, 1965, passed an order imposing a penalty of Rs. 3,000. He observed that the maximum penalty imposable in this case worked out to Rs. 3,630 and so the imposition of Rs. 3,000 as penalty was reasonable. The assessee took this order in appeal to the Tribunal.
2. Before the Tribunal it was argued that on the finding that the maximum penalty imposable was Rs. 3,630 which, in other words, meant that this amount was one and a half times of the amount of tax which would have been avoided if the income as returned by the assessee had been accepted as the correct income, the minimum penalty, which should be 20 per cent. of the avoided tax, would work out to Rs. 484, that is, below Rs. 1,000. The Tribunal held that, on the facts as given by the Inspecting Assistant Commissioner in his order, it appeared that the minimum penalty imposable worked out to less than Rs. 1,000 and, therefore, there was sufficient force in the argument that only the Income-tax Officer had jurisdiction to impose penalty. The Tribunal observed that looking to the other facts and circumstances on record, it appeared that the Inspecting Assistant Commissioner had made a mistake in working out the maximum penalty imposable. The Tribunal then held :
"In these circumstances, we are of the view that it is a fit and proper case where the order of the Inspecting Assistant Commissioner should be set aside and he should be required to pass a fresh order, if need be, after finding out the correct facts and after giving opportunity to both the parties of being heard."
3. On this view the Tribunal directed :
"We accordingly set aside the order of the Inspecting Assistant Commissioner, who shall, if need be, pass a fresh order as he thinks expedient in accordance with law."
4. The Inspecting Assistant Commissioner thereafter heard the assessee and by his order dated 4th November, 1967, imposed a penalty of Rs. 3,000. The Inspecting Assistant Commissioner held that in a case where the order imposing penalty is set aside in appeal by the Tribunal with a direction to pass a fresh order in accordance with law, the limitation imposed by Section 275 will not operate in respect of the fresh order of penalty, and that he was, therefore, competent to pass a fresh penalty order. Aggrieved, the assessee went up in appeal to the Tribunal.
5. It was urged before the Tribunal that the order passed by the Inspecting Assistant Commissioner was barred by limitation of two years provided in Section 275 of the Income-tax Act, 1961. To this contention the departmental representative's reply was that, as held by the Supreme Court in Bhopal Sugar Industries Ltd. v. Income-tax Officer, Bhopal, [1960] 40 ITR 618 (SC), the Inspecting Assistant Commissioner was duty bound to carry out the directions of a superior appellate authority, namely, the Tribunal. The Tribunal upheld this plea of the department and held that the Inspecting Assistant Commissioner was bound to pass an order as directed by the Tribunal.
6. The Tribunal then addressed itself to the question whether in its earlier order it had directed the Inspecting Assistant Commissioner to pass an order imposing penalty afresh, and held that it had asked the Inspecting Assistant Commissioner to pass a fresh order as he thought expedient in accordance with law, and that this did not mean that the Tribunal had directed the Inspecting Assistant Commissioner to pass an order irrespective of the fact whether it was or was not in accordance with law. It was further observed that the Tribunal had cancelled the order of the Inspecting Assistant Commissioner and had left it to him to make a fresh order if he could make it in law that there was no positive direction for making a fresh order without any regard to the provision of law and that the period of limitation prescribed by Section 275 of the Act was applicable and no penalty order could be passed after the expiry of two years from the date of the completion of the assessment proceedings. On this view the order imposing penalty was cancelled.
7. At the instance of the Commissioner of Income-tax the Tribunal has referred the following question of law for the opinion of this court:
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was legally correct in holding that the Inspecting Assistant Commissioner was debarred by the time limit provided under Section 275 of the Income-tax Act, 1961, even though he otherwise thought it expedient to pass a fresh order in consequence of the Tribunal's order dated March 13, 1967, under Section 254 and on that ground in cancelling the penalty imposed by the Inspecting Assistant Commissioner under Section 271(1)(c) read with Section 274(2) of the Act?"
8. The principal aspect raised by the question referred to us is whether the period of limitation prescribed by Section 275 was applicable to the proceedings conducted by the Inspecting Assistant Commissioner as a result of the Tribunal's order dated 13th March, 1967. In this view both the findings of the Tribunal, namely, the one on the question whether the Inspecting Assistant Commissioner could validly pass a fresh order of penalty irrespective of the period of limitation prescribed for it if the Tribunal had made a direction to that effect, as well as the other finding as to the construction of the Tribunal's order dated 13th March, 1967, are within the purview of the question referred to us.
9. After finding that the Inspecting Assistant Commissioner had made a mistake in working out the maximum penalty imposable, the Tribunal set aside the order of the Inspecting Assistant Commissioner and directed him to pass a fresh order "as he thinks expedient in accordance with law if need be". By this order the Tribunal left the latitude to the Inspecting Assistant Commissioner to pass a fresh order in accordance with law, if he thought that it was expedient to do so, after hearing the parties. The direction that he was to pass a fresh order in accordance with law implied full liberty to the parties to raise whatever pleas were available to them in law, and liberty to the Inspecting Assistant Commissioner to deal with those pleas in accordance with law and then to pass an order.
10. A perusal of the Tribunal's order dated 13th March, 1967, shows that the Tribunal did not address itself at all to the question whether, in view of the expiry of the prescribed period of limitation of two years, the Inspecting Assistant Commissioner could pass a fresh order at that point of time. In our opinion, even if any implication with regard to the question of jurisdiction arises, the only possible construction of this order can be that the Tribunal left this question open to be decided by the Inspecting Assistant Commissioner. The Tribunal is, in our opinion, justified in taking the view that since in its order dated 13th March, 1967, it did not shackle the Inspecting Assistant Commissioner to positively pass a fresh order of penalty, the matter was left at large for the Inspecting Assistant Commissioner.
11. Since, in our opinion, the view of the Tribunal, that it left the Inspecting Assistant Commissioner free to make a fresh order if he could make a valid order in law, was correct, it is, in our opinion, unnecessary to express a concluded opinion in the other question, whether the Inspecting Assistant Commissioner would have been bound to obey the direction of the Tribunal to pass a fresh order of penalty irrespective of the fact that by lapse of time he lost jurisdiction to make such an order. This other question has, in the circumstances, become merely of academic value.
12. We, therefore, answer the question referred to us in the affirmative, in favour of the assessee and against the department. The assessee will be entitled to costs, which are assessed at Rs. 200. The fee of the learned counsel is also assessed at the same figure.