A.P.Misra, J. - (1.) In the present applications under Section 256(2) of the Income-tax Act, 1961, preferred by the Department the only question sought to be referred is : "Whether, on the facts and in the circumstances of the case, the Tribunal was, in law, justified in cancelling the penalty imposed under Section 271(1)(a) of the Income-tax Act, 1961 ?"
(2.) The brief facts of the case are that the assessee contested the levy of penalty under Section 271(1)(a) of the Income-tax Act, 1961, for the years 1978-79, 1979-80 and 1980-81. It is not being disputed that the returns were filed after some delay. The Department had issued notice under Section 148 of the Act for the assessment years 1978-79 and 1979-80. The assessing authority did not find the explanation of the assessee to be satisfactory for the delayed return and hence imposed penalties, which were confirmed by the first appellate authority. The Tribunal delated the penalty imposed for the assessment years 1978-79 and 1979-80, but maintained the penalty for the assessment years 1980-81 by treating the assessee as a defaulter only for a period of 20 months instead of 29 months as found by the assessing authority. The Department being aggrieved as against this order of the Tribunal sought for a reference to this court by way of the aforesaid question.
(3.) We find that for the assessment year 1978-79, the return was filed on March 2, 1981, that is to say, within two days of filing of the return for the previous year, namely, 1977-78. The Tribunal found that the accounts for the earlier year have to be completed before the accounts for the subsequent year could be taken up. It is on these facts that the Tribunal further found that the delay in completing the accounts for this year shows reasonable cause. Hence, the penalty imposed by the assessing authority was cancelled. We find no error in the order.;