Bona fide explanation in penalty proceedings supported cancellation where the factual finding left no referable question of law.

Cancellation of penalty under section 271(1)(c) was sustained because the assessee's explanation for the default was found plausible and bona fide on the material on record. The High Court treated that conclusion as a finding of fact, not open to interference in reference jurisdiction, and held that no referable question of law arose from the Tribunal's order. The penalty cancellation was therefore upheld and the reference application was rejected.

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Issues: Whether the Tribunal was justified in cancelling the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.

Analysis: The assessee's explanation for the default was found to be plausible and bona fide on appreciation of the material on record. That finding was treated as a finding of fact requiring no interference in reference jurisdiction. In view of that conclusion, no referable question arose from the Tribunal's order.

Conclusion: The cancellation of penalty was upheld and the reference application was rejected.

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