- (1.) The Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), for opinion to this Court : "1. Whether the Tribunal is correct in law and on facts in vacating the confirmation of the penalty imposed under Section 271B of the Act at Rs. 32,548 for asst. yr. 1987-88 ?
(2.) Whether the Tribunal is correct in law in holding that the penalty order is also required to be vacated on account of being excessive in the quantum without appreciating that the quantum of penalty is fixed by the provisions of Section 271B of the Act ?" 2. The reference relates to the asst. yrs. 1987-88 and 1988-89.
(3.) Briefly stated, the facts giving rise to the present reference are as follows : The return of income for the asst. yr. 1987-88 was due to be filed on or before 30th June, 1987, whereas it was actually filed on 29th Sept., 1987. The respondent-assessee had also filed audit report dt. 10th Sept., 1987, along with the return of income. Likewise for the asst. yr. 1988-89 the return of income was to be filed on or before 30th June, 1988, but it was filed on 31st Aug., 1988, along with the audit report dt. 30th Aug., 1988. As the audit report had not been obtained before the due date of filing of the return of income penalty proceedings under Section 271B of the Act were initiated in respect of both the assessment years and the AO after giving opportunity of hearing imposed sum of Rs. 23,548 and Rs. 37,583, respectively as penalty. This order has been affirmed by the CIT(A). However, in further appeal, the Tribunal has deleted the penalty on two grounds. Firstly, there was reasonable cause for not getting the accounts audited and obtaining the audit report within the due date and secondly, the penalty imposed is excessive looking to the income assessed.;