Statutory penalty rates cannot be reduced on appeal absent express power to vary the prescribed computation.

A penalty provision that fixes a uniform monthly rate and only a ceiling on the total quantum must be applied as written, and an appellate authority cannot reduce the penalty below the statutory computation unless the statute expressly permits such relaxation. The appellate power to pass such orders as it thinks fit does not override the substantive limits built into the penalty provision. On that basis, reduction of the penalty to a nominal amount was held erroneous because the prescribed rate remained mandatory once penalty was imposed.

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Issues: Whether, in an appeal against a penalty imposed for failure to furnish returns in time, the Appellate Tribunal could reduce the penalty below the quantum computed at the statutory rate under the provision governing such penalty.

Analysis: The penalty provision prescribed a uniform rate of two per cent of the tax for every month of default, subject only to the aggregate ceiling of fifty per cent of the tax. The appellate power to pass such orders as it thinks fit did not authorise the Tribunal to disregard the statutory limits attached to the penalty provision. The Tribunal, exercising appellate jurisdiction, had to act within the same statutory constraints as the original authority, and the absence of an express power to reduce or waive the penalty, unlike the specific relaxation granted elsewhere in the Act, confirmed that the prescribed rate was mandatory where penalty was imposed.

Conclusion: The Tribunal could not reduce the penalty below the amount computed at the statutory rate, and the reduction to Rs. 200 was erroneous.

Ratio Decidendi: Where a penalty provision fixes a specific rate and only a ceiling on the total quantum, the appellate authority cannot vary that rate while exercising appellate powers unless the statute expressly confers such power.

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