Fresh hearing required after change of assessing officer; appellate power to remit penalty orders remained statutorily limited.

Penalty proceedings under section 271(1)(c) could not be completed by a successor assessing officer without granting a further hearing where the assessee had already been heard and had no notice of the change in incumbent; the penalty order was therefore unsustainable. The appellate authority's powers in penalty matters were confined to those specifically conferred by statute, and section 251 did not authorise a general power to set aside and remit the penalty order. The cancellation of the penalties was accordingly upheld, and the departmental appeals failed.

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Issues: (i) whether, on change of the assessing officer, fresh hearing was required before completing penalty proceedings under section 271(1)(c); (ii) whether the appellate authority had power to set aside and remit the penalty order.

Issue (i): whether, on change of the assessing officer, fresh hearing was required before completing penalty proceedings under section 271(1)(c).

Analysis: The assessee had not confined herself to written submissions alone and had been represented before the officer when the matter was pending. In such circumstances, when the officer who had heard the matter was replaced, the succeeding officer could not complete the proceedings without affording a further opportunity of hearing. The proviso to section 129 was applied on the footing that the assessee must have notice of the change in incumbent before a demand for rehearing can effectively be made.

Conclusion: Fresh hearing was required, and the penalty order passed without such hearing was not sustainable.

Issue (ii): whether the appellate authority had power to set aside and remit the penalty order.

Analysis: The powers of the appellate authority in penalty matters are limited to the powers conferred by statute. Section 251 does not confer a general power to set aside penalty proceedings in the same manner as in certain other appellate contexts. The theory of inherent powers could not be used to enlarge the statutory power, especially where the legislature had deliberately withheld such power in penalty appeals.

Conclusion: The appellate authority had no power to set aside and remit the penalty order in the manner suggested by the Revenue.

Final Conclusion: The cancellation of the penalties was upheld and the departmental appeals failed.

Ratio Decidendi: Where an assessee has been heard before a change of the incumbent and has not had notice of the substitution, a further hearing is required before concluding penalty proceedings; in penalty appeals, the appellate authority cannot assume powers of remand or setting aside beyond those specifically conferred by statute.

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