R.N.MITTAL,J. - (1.) ON the application of the CIT, Amritsar, Tribunal, Amritsar, referred the following two questions under s. 256 of the IT Act (hereinafter to be referred to as the Act for opinion this Court:- (1) "Was the Tribunal, on the facts and in the circumstances of the case, right in holding that the tax which is to form basis of computation of the penalty under s. 271(1)(i) of the IT Act is the amount shown in the demand notice as payable even if the working out of that covers some amount refundable for a different assessment year"? (2) "Whether on the facts of the case the Tribunal was right in holding that s. 271 (2) of the IT Act could not be given effect to in cases where the tax demanded under s. 156 of the IT Act from the assessee as a registered firm was nil".
(2.) BRIEFLY , the facts of the case are that Gian Talkies, Abohar, is a partnership firm. It has to furnish IT return relating to asst. yr. 1967-68 by 15th Nov., 1967, but it was actually furnished on 28th Jan., 1969. Thus there was a delay of 14 months in filing the return. The ITO initiated penalty proceedings vide notice dt. 20th Jan., 1969. He imposed a penalty of Rs. 5867/- vide order dt 24th Sept., 1969 holding that the delay appeared to be wilful and deliberate. The assessee went up in appeal before the AAC. He held that the penalty had been imposed not on the basis of the show-cause notice dt. 20ty Jan., 1969., but on the basis of a revised show cause notice dt. 28th. Jan., 1969., which was issued after the receipt of the IT return on 28th. Jan., 1969. He further held that by virtue of provisions of s. 271(2) of the Act the penalty could be levied even if the demand notice, addressed to the registered firm, showed the demand to be nil .He, consequently, affirmed the order of penalty but directed that the tax forming basis of computation of the penalty be re-calculated taking into consideration the payment of Rs. 862 by way of advance tax.
(3.) THE assessee went up in appeal before the Tribunal which by its order dt. 31st March, 1972, deleted the penalty on the ground that in face of demand notice showing 'nil' demand there was no tax payable by the assessee which could form basis of the computation of penalty. The Tribunal further noted that the 'nil' demand had resulted from the fact that the tax from the total income of the assessee came to Rs. 2,330/- and that the assessee had paid Rs. 862/- as advance tax and Rs. 1,468/- as self-assessed tax under s. 140A(1) of the Act.;