M.B.Sharma, J. - (1.) THE petitioner, Messrs. Silver and Art Palace, an assessee to income-tax (for short, "the assessee") who has preferred an appeal under Section 246(1) of the Income-tax Act, 1961 (for short, "I. T. Act"), against the order imposing penalty under Section 271 of that Act and the said appeal is still pending, has challenged the notice, annexure 8, dated April 1, 1992, issued by the Assistant Commissioner of Income-tax, Central Circle-II, the assessing authority to Shri K. K. Dugar, on the ground that the said notice is without jurisdiction and, therefore, it should be quashed.
(2.) THE assessment proceedings for the assessment year 1986-87 were completed on March 27, 1989. THEreafter, penalty proceedings were started under Section 271 of the Income-tax Act against the petitioner and, during those proceedings, a request was made on behalf of the petitioner that no opportunity to cross-examine Shri K. K. Dugar, the proprietor of Messrs. Dugar Exim Liners, has been afforded and an opportunity was sought to cross-examine him and an application was also filed before the assessing authority, but that application was not allowed and ultimately under order, annexure 7, a penalty of Rs. 3,82,345 was imposed on the petitioner. Against the aforesaid order, an appeal, as said earlier, was preferred under Section 246(1) of the Income-tax Act before the Commissioner of Income-tax (Appeals). Arguments were heard on March 13, 1992, and thereafter, the assessing authority, respondent No. 2, the Assistant Commissioner of Income-tax, Central Circle-2, Jaipur, issued a notice dated April 1, 1992 (impugned notice), to Shri K. K. Dugar that his attendance is required to give evidence and/or to produce either personally or through an authorised representative the books of account and/or other documents specified therein. A reply to the aforesaid notice appears to have been filed by the petitioner wherein information was sought under what provision of law the said notice was issued and Shri Dugar has been summoned. Respondent No. 2 again issued a notice dated April 13, 1992, drawing the attention of the petitioner that Shri K. K. Dugar was asked to attend the office on April 9, 1992, but he has not appeared and, in the appeal before the Commissioner of Income-tax (Appeals), Raj. I, Jaipur, it has been argued that no separate opportunity for cross-examination of Shri Dugar was given to the petitioner and that that is why Shri Dugar was called upon to give evidence and to produce documents. THE petitioner has also challenged the aforesaid notice. Reply to the show-cause notice issued to the respondents has been filed and it has been said in the reply that the Commissioner of Income-tax (Appeals) was of the opinion that no opportunity of cross-examination of Shri Dugar was allowed and that further inquiry should be made in the matter and, therefore, he directed respondent No. 2 to record the statement of Shri Dugar and afford an opportunity to the petitioner to cross-examine Shri Dugar and to remit his comments to the Commissioner of Income-tax (Appeals). It was contended by learned counsel for the petitioner that, under Section 251 of the Income-tax Act, while hearing the appeal, the Commissioner (Appeals) has no power and jurisdiction to make an enquiry and only under Section 251(1)(a) he could have had the power to remit the case to the assessing authority for making fresh assessment in accordance with his directions or to make further enquiry as may be necessary, but so far as Section 251(1)(b) is concerned, the present appeal being an appeal against an order imposing penalty, that provision is applicable, no such power is vested in the Commissioner (Appeals) even to remit the case to the assessing authority to make further enquiry and all that was within the power of Commissioner (Appeals) while disposing of the appeal against the order imposing penalty was to confirm or cancel such order or vary it so as either to enhance or reduce the penalty. In support of his contention, learned counsel for the petitioner has referred to the case of CIt v. Eminent Enterprises [1993] 201 ItR 766 (Ker). There can be no dispute that, in so far as power under Section 251(1)(b) of the Income-tax Act is concerned, in an appeal against an order imposing penalty, the Commissioner (Appeals) has only the power either to confirm or cancel or vary an order so as to enhance or reduce the penalty, but he has no power to remit the case to the assessing authority and to direct further enquiry or to make an enquiry. But a reference to Section 250 of the Income-tax Act is necessary and that section contains the procedure in appeal and an appeal is also an appeal under Section 246(1)(b) against an order imposing penalty under Section 271(1) of the Income-tax Act. Therefore, the question is as to whether, in an appeal against an order imposing penalty, the Commissioner (Appeals) has power before disposing of the appeal to make further enquiry or to direct the assessing authority to make an enquiry ? A look at Section 250(4) of the Income-tax Act is necessary and it reads as under : "The Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals)." A bare reading of Sub-section (4) of Section 250 of the Income-tax Act will leave no doubt that, before actually disposing of the appeal, power is vested in the Commissioner (Appeals) to make further inquiry as he may deem fit or he may direct the assessing authority to make an inquiry and report the result thereof to him. It was contended by learned counsel that the said Sub-section (4) of Section 250 should be read with Section 251(1)(b) and even if it is so read, in my opinion, it will not make any difference because whereas Section 251(1)(b) deals with the power of the Commissioner (Appeals) in disposing of an appeal, Sub-section (4) of Section 250 deals with the power of the Commissioner to keep an appeal pending and make further inquiry either himself or to direct the assessing authority to make further inquiry and after making such inquiry or causing such inquiry to be made by the assessing authority while disposing of the appeal, the Commissioner (Appeals) has to function within the four corners of Section 251(1)(b) in an appeal against an order imposing penalty and he will then have no power to have made any inquiry or to have directed the assessing authority to make any inquiry, but while keeping the appeal file pending and before disposing of it, power is conferred on him to make such further inquiry as he may deem fit or to direct the assessing authority to make further inquiry. It was the petitioner who had raised the argument not only before the Commissioner (Appeals) but even before the assessing authority that no opportunity to cross-examine Shri Dugar was afforded and the Commissioner being of the opinion that further inquiry is necessary and opportunity to cross-examine Shri Dugar should be given to the petitioner, directed the assessing authority to record the evidence of Shri Dugar and afford the petitioner an opportunity to cross-examine him. In my opinion, the order of the Commissioner of Income-tax (Appeals) which has been filed by the respondents along with the reply as annexure R2/1 under which the assessing authority was directed to make an inquiry cannot be said to be without jurisdiction. Consequently, I find no force in this writ petition. It is hereby dismissed with costs of Rs, 2,000 which the petitioner shall pay to the respondents. The stay order stands vacated. ;