Penalty reduction by appellate authority need not follow the original percentage basis, and different quantum alone is not enhancement.

An appellate authority reducing a penalty is not bound to preserve the same proportion of the maximum penalty as adopted in the original order. The Tribunal may reassess the material and reduce the penalty based on the relevant circumstances, and a reduced amount that still exceeds fifty per cent of the maximum penalty does not, by itself, amount to enhancement. On that reasoning, the reduction made by the Tribunal was held not to be an enhancement of the penalty originally levied by the Inspecting Assistant Commissioner, and the answer was against the assessee.

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Issues: Whether reduction of penalties by the Income-tax Appellate Tribunal to amounts lower than those imposed by the Inspecting Assistant Commissioner nevertheless amounted to an enhancement of penalty.

Analysis: The assessee's contention proceeded on the assumption that the penalty imposed by the Tribunal had to bear the same percentage to the maximum penalty as the penalty originally levied. The Tribunal was, however, not bound to preserve the same ratio. It had the material before it and reduced the penalties after considering the relevant circumstances. The fact that the reduced amounts exceeded fifty per cent of the maximum penalty did not, by itself, show that the Tribunal enhanced the penalties.

Conclusion: The reduction made by the Tribunal did not amount to enhancement of the penalties levied by the Inspecting Assistant Commissioner and the answer was against the assessee.

Final Conclusion: The reference was answered in the negative, upholding the Tribunal's power to reduce the penalties without being tied to the earlier percentage basis.

Ratio Decidendi: An appellate authority reducing a penalty is not bound to maintain the same proportion of the maximum penalty as was adopted in the original order, and a different quantum does not by itself constitute enhancement.

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