- (1.) THE Income Tax Appellate Tribunal, Allahabad, has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion to this Court: - 'Whether, on the facts and in the circumstances of the case and having due regard to the provision of section 271(2) of the Income Tax Act, 1961, the Tribunal was legally justified in upholding the action of the Deputy Commissioner (Appeals) in cancelling the penalty levied under section 271(1)(a) of the Income Tax Act, 1996 -97
(2.) THE reference relates to the assessment years 1984 -85 and 1985 -86. The facts giving rise to the present reference in brief are as follows : - The respondent -assessee is a registered firm. For the assessment years 1984 -85 and 1985 -86 the assessee failed to file the return of income within time laid down under section 139(1) of the Act. The penalty proceedings under section 271(1)(a) of the Act were initiated for the aforesaid two assessment years and after hearing the assessee penalty of Rs. 9,405 and Rs. 5,903 respectively were imposed under the aforesaid section by the assessing authority. However, the Deputy Commissioner (Appeals) cancelled the penalties in appeals filed by the assessee on the ground that advance tax paid by the assessee -firm was more for the aforesaid two assessment years than the tax payable by the registered firm. The said orders have been confirmed in second appeal preferred by the department before the Tribunal.
(3.) HEARD learned counsel for the parties.;