R.K.Gulati, J. - (1.) This is a reference under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). In pursuance of the directions of this court, the Income-tax Appellate Tribunal has referred the following three questions for the opinion of this court : "1. Whether, on the facts and in the circumstances of the case, the term 'total income' used in Section 271(3)(a) of the Income-tax Act, 1961, means total income as disclosed in the returns filed by the assessee or the total amount of income as finally computed in the manner laid down in this Act, as defined in Section 2(45) of the Income-tax Act, 1961?
(2.) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the penalty order under Section 271(1)(a) was barred by limitation and the amendment brought about in Section 275 by Act No. 42 of 1970 was not applicable in this case, even though the penalty proceedings were pending before the Income-tax Officer when the amendment came into force with effect from April 1, 1971 ?
(3.) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in cancelling the penalty imposed by the Income-tax Officer under Section 271(1)(a) of the Income-tax Act, 1961, for the assessment year 1965-66 ?" 2. The assessee is a registered firm of commission agents in foodgrains. For the assessment year 1965-66, its return of income under Section 139(1) of the Act was due on June 30, 1965. The assessee, however, filed a belated return on September 15, 1967, showing taxable income of Rs. 25,893 on which the assessment was completed on March 11, 1970, on a net taxable income of Rs. 88,055. It appears that the assessed income was reduced by Rs. 20,585 in appeal by the Appellate Assistant Commissioner. In due course, the Income-tax Officer initiated penalty proceedings under Section 271(1)(a) of the Act and subjected the assessee to a penalty of Rs. 17,618 on the finding that the assessee had not come forward with any explanation for furnishing a belated return. In appeal, the action was upheld except that the quantum of penalty levied was reduced partially. On further appeal the Income-tax Appellate Tribunal knocked off the impugned penalty in its entirety. 3. We have heard learned standing counsel for the Revenue. None had put in appearance on behalf of the assessee despite notice.;