JUDGMENT
Milap Chandra, J. – This reference under s. 256(1) of the IT Act, 1961 is at the instance of the Revenue for deciding the following question of law, namely :
“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the IAC had no jurisdiction to levy the penalty ?”
2. The relevant assessment year is 1971-72 for which the accounting period ended on 31-3-1971. The ITO made certain additions to the income shown by the assessee in the return filed by him. On the basis of these additions the ITO also initiated penalty proceedings under s. 271(1)(c) of the Act and referred the matter to the IAC concerned. The IAC imposed penalty of Rs. 39,500 under s. 271(1)(c) of the Act. The assessees appeal to the Tribunal against imposition of the penalty was allowed and it was held that the IAC had no jurisdiction to levy the penalty aggrieved by the view taken by the Tribunal the Revenue applied for a reference under s. 256(1) of the Act which has been made by the Tribunal the answer the above question of law.
3. When this came up for hearing initially it was pointed out by the ld. counsel for the assessee that the assessee had been granted relief in the quantum appeal filed before the AAC, as a result of which the very basis for imposing the penalty had disappeared inasmuch as the additions made to the returned income by the ITO had been deleted by the AAC in the quantum appeal. Learned counsel for the Revenue was granted time to seek instructions in view of this statement made by the ld. counsel for assessee. The ld. Standing Counsel for the Revenue frankly stated before us that the factual position is as stated by the counsel for the assessee. It has been pointed out that by order dt. 17-8-1983 passed in the quantum appeal by the AAC the additions made by the ITO have been deleted with the result that the very foundation for imposition of the penalty under s. 271(1)(c) has disappeared. In this situation imposition of penalty cannot be upheld and the Tribunals order setting aside the penalty has to be sustained.
4. As a result of the aforesaid discussion it is held that the Tribunals order setting aside the penalty imposed on the assessee does not call for any interference and the question referred to decision by this Court is merely of an academic interest now so that it need not be answered. No costs.