1988 (6) TMI 30

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....de under subsection (1) of section 256 of the Income-tax Act, 1961. The three questions referred read as follows : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that despite the charge of interest under clause (iii) of the proviso to section 139(1) of the Income-tax Act, 1961, penalty can be validly imposed under section 271(1)(a) of t....

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....sessee. The Income-tax Officer, in his case, imposed penalty under clause (a)(i) of section 271(1) of the Income-tax Act, 1961. On appeal, the Appellate Assistant Commissioner condoned the delay and recomputed the penalties on the basis of the unexplained period of delay for each year. On further appeal by the assessee, the Appellate Tribunal reduced the penalties. Thereafter, at the instance of t....

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....med to have been discharged in a proper and bona fide manner. But the Supreme Court's answer was (at p. 439) "No attempt was made by the Revenue to show that the Income-tax Officer acted arbitrarily and contrary to the procedure envisaged by the statute". The purpose of making a reference is to see whether the procedure is followed and whether the order was arbitrary. The test is not that of "prop....