Penalty jurisdiction depends on the Income-tax Officer's satisfaction in the relevant proceedings, not later appellate modification.

Delay in seeking a certificate to appeal to the Supreme Court was condoned where the applicant relied on an earlier binding view allowing exclusion of time spent obtaining the certified copy of the order, though the Court noted lack of diligence. On the merits, no substantial question of law was found on penalty jurisdiction because the power to impose penalty under the Indian Income-tax Act, 1922 depends on the Income-tax Officer's satisfaction in the relevant proceedings, and that requirement was not satisfied merely because the assessment had later been modified by the Appellate Assistant Commissioner.

---

---

Issues: (i) Whether the delay in moving the application for certificate to appeal to the Supreme Court could be condoned; (ii) whether a substantial question of law arose on the merits concerning the jurisdiction to impose penalty after the assessment was modified by the Appellate Assistant Commissioner.

Issue (i): Whether the delay in moving the application for certificate to appeal to the Supreme Court could be condoned.

Analysis: The application was filed after the judgment, and the applicant had obtained the certified copy of the judgment earlier but had not promptly obtained the certified copy of the order. The Court noted the argument that the time for obtaining the order copy was not excludable under section 67A of the Indian Income-tax Act, 1922, but also noticed an earlier Division Bench view that had treated the applicant as entitled to exclude that time. The Court treated that earlier view as binding, while observing that the applicant had not acted diligently.

Conclusion: The delay, to the extent it arose from waiting for the certified copy of the order, was condoned.

Issue (ii): Whether a substantial question of law arose on the merits concerning the jurisdiction to impose penalty after the assessment was modified by the Appellate Assistant Commissioner.

Analysis: The Court found that the assessment had been modified by the Appellate Assistant Commissioner and that the Supreme Court had already laid down that the power to impose penalty depends on the satisfaction of the Income-tax Officer in the course of proceedings before him. Since the relevant proceedings were not before the Income-tax Officer but before the Appellate Assistant Commissioner, the Court held that the authorities relied on by the Revenue did not displace the settled position.

Conclusion: No substantial question of law arose warranting a certificate for appeal to the Supreme Court.

Final Conclusion: The application for certificate of fitness to appeal was rejected because the delay was not an obstacle and the merits did not disclose any substantial question of law.

Ratio Decidendi: Under the Indian Income-tax Act, 1922, delay attributable to reliance on an earlier binding view may be condoned, but penalty jurisdiction depends on the satisfaction of the Income-tax Officer in the relevant proceedings and does not arise merely because the Appellate Assistant Commissioner later modifies the assessment.

---