- (1.) The Income-tax Appellate Tribunal has referred the following two questions of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion of this court : "(i) Whether, on the facts and in the circumstances of the case, the Tribunal was in law competent to reduce the penalty under Section 271(1) (a) to a figure lower than the sum equal to two per cent, of the tax for every month during which the default continued but not exceeding in the aggregate 50 per cent of the tax ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was competent to reduce the quantum of penalty below the minimum prescribed in Section 271(1)(a) of the Income-tax Act, 1961 ?"
(2.) Briefly stated, the facts giving rise to the present reference are as follows:
(3.) The respondent-assessee is an individual and the matter pertains to the assessment year 1948-49, accounting year ending in September, 1947. By a notice under Section 148 of the Act, the respondent-assessee was required to file his return for the year under reference on or before May 5, 1973. However, it was filed on September 20, 1974. The Income-tax Officer initiated proceedings under Section 274 read with Section 271(1) (a) of the Act and issued a .notice to show cause as to why penalty should not be imposed for the late submission of the return. The respondent-assessee in his reply submitted that the default was technical as it was pointed out that the same income be assessed which was originally assessed for the assessment year 1948-49. The Income-tax Officer being dissatisfied with the explanation, imposed a penalty of Rs. 51,148.00 under Section 271(1)(a) of the Act vide his order dated March 26, 1977. In appeal, the Appellate Assistant Commissioner confirmed the penalty imposed on the respondent-assessee. The respondent-assessee feeling aggrieved preferred an appeal before the Tribunal. The Tribunal though found that there was no infirmity in the order as the respondent-assessee had failed to show any reasonable cause for not filing the return in time, yet reduced the penalty to Rs. 2,000 as a token penalty, to meet the ends of justice.;