THE COMMISSIONER OF INCOME TAX, LAHORE ZONE, LAHORE vs MESSRS MIR

This matter concerns a petition for leave to appeal against a judgment of the High Court regarding the imposition of a penalty under the Income-tax Act. The assessee, a registered firm, failed to pay advance tax under Section 18-A(1) of the Income-tax Act, leading the Income-tax Officer to propose a penalty of Rs. 1,000. Under Section 28(6) of the Act, such a penalty requires the approval of the Inspecting Assistant Commissioner. Instead of approving or disapproving the proposed amount, the Inspecting Assistant Commissioner unilaterally imposed a penalty of Rs. 5,000. The core legal question was whether the statutory power to approve a proposed penalty includes the authority to alter, amend, or enhance that penalty. The High Court held that the power to approve does not encompass the power to amend the proposed penalty. The Supreme Court affirmed this view, finding that the Inspecting Assistant Commissioner exceeded their authority by enhancing the penalty rather than merely exercising the power of approval. Consequently, the Supreme Court dismissed the petition, upholding the principle that a statutory power of approval is limited to the scope of the proposal submitted for review.