COMMISSIONER OF INCOME TAX Vs. KALYAN SINGH

JUDGEMENT

(1.) THIS is a reference at the instance of the CIT under S. 256(1) of the INCOME TAX ACT, 1961. The reference arises out of the proceedings for the levy of a penalty under S. 271 (1)(a) of the INCOME TAX ACT, 1961, for the asst. yrs. 1960 -61 and 1961 -62, in the case of Kalyan Singh of Delhi.

(2.) THE assessments for both the years were completed by the ITO on March 30, 1963, under S. 143 (3) of the INCOME TAX ACT, 1961. The ITO was also of opinion that the delay in the filing of the returns was not due to reasonable cause. He, therefore, issued notices to the assessee and after considering and rejecting the explanation given by the assessee for the delay in the filing of the returns, imposed penalties of Rs. 11,318 and Rs. 2,842, respectively for the two assessment years. It is common ground that these penalties have been levied at the rates prescribed by S. 271 (1)(a) of the Act, 1961, i.e., they have been calculated at 2per cent of the tax payable by the assessee for these years.

(3.) THE Tribunal granted the above reduction because it was of the opinion, which has been expressed in para. 5 of the order, that in respect of defaults as committed by the applicant in this case the quantum should be determined with reference to the Act of 1922. At the request of the CIT, the following three questions have been referred to us for our decision: