- (1.) TWO questions of law have been sought to be referred to this court under section 256(2) of the Income-tax Act, 1961, on which rule was issued. The questions are as follows : '1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no penalty is leviable under section 271(1)(a) of the Income -tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal that there is reasonable cause for delay in filing the returns was perverse and in that view whether the Tribunal was justified in cancelling the penalty levied under section 271(1)(a) of the Income -tax Act, 1961 ?'
(2.) THE Tribunal held as follows : 'A perusal of the order of the Commissioner of Income -tax (Appeals) goes to show that he has not disputed the fact that the accounts of the assessee -company under section 594 of the Companies Act, 1956, were ready by the end of September 1977. It must, therefore, be held that up to the end of September 1977, the assessee had a reasonable cause for not filing the return of income by that time. However, it has been rightly contended on behalf of the assessee that after preparation of accounts and the audit under section 594, some more time was spent in the collection of particulars for preparation of the return and to get the return signed by the director as required by section 160 of the Income -tax Act, 1961. It is clearly mentioned in the explanation dated July 6, 1981, that it was necessary for the assessee -company to send the return of income prepared in India for the signature of the director in the U.K. and that it also took some time for getting the signed return from the U.K. and submitting the same to the Income -tax Officer. On a consideration of the facts and circumstances of the case, we are fully satisfied that after the audit of accounts under section 594 was ready, the assessee took only a reasonable time in submitting. its return of income on January 5, 1978. In this view of the matter, it must further be held that the assessee succeeded in establishing that there was reasonable cause for the delayed submission of the return on January 3, 1978. In this view of the matter, we hold that this was not a fit case for imposition of penalty under section 271(1)(a). In the result, the appeal stands allowed. The penalty imposed by the Income -tax 'Officer is cancelled.' On these facts, we are of the view that the Tribunal came to a correct conclusion and we agree with the findings of the Tribunal. [n that view of the matter, the rule is discharged. The application is rejected. There will be no order as to costs.;