Appellate cancellation of penalty is final unless challenged through the prescribed statutory remedy; fresh reimposition is unauthorised.

Where an Appellate Assistant Commissioner cancels a penalty order under the Income-tax Act, 1922, that appellate cancellation has finality unless lawfully challenged through the prescribed statutory remedy. The Income-tax Officer cannot treat the appellate order as ineffective and reimpose the same penalty on his own initiative. The statute vested the appellate authority with power to confirm, cancel or vary the penalty order, and any objection to that appellate decision had to be pursued under section 33(2). In the absence of such challenge, a fresh penalty order on the same footing is without authority.

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Issues: Whether, after the Appellate Assistant Commissioner cancelled a penalty order under section 28(1)(c) of the Indian Income-tax Act, 1922, the Income-tax Officer could ignore that appellate order and reimpose the same penalty without recourse to section 33(2).

Analysis: The appellate authority had expressly cancelled the penalty and the statute conferred power on the Appellate Assistant Commissioner to confirm, cancel, or vary a penalty order. If the Commissioner objected to that appellate order, the remedy was to direct an appeal under section 33(2). No such step was taken. The Income-tax Officer therefore had no authority to treat the appellate cancellation as ineffective and revive the concluded penalty proceedings.

Conclusion: The Income-tax Officer could not sustain the fresh penalty order; the petitioner succeeded.

Final Conclusion: The appellate cancellation operated with finality, and the subsequent penalty order was without authority.

Ratio Decidendi: When a penalty order is cancelled in appeal under the statutory appellate power, the Income-tax Officer cannot disregard that cancellation and reissue the penalty unless the appellate order is lawfully challenged under the prescribed statutory remedy.

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