Judgement

VAIDIALINGAM, J.: - This appeal, by special leave, by the Commissioner of Income-tax, Madras, is against the Judgment and Order dated October 3, 1966 of the High Court of Mysore, rejecting the appellant s application filed under Section 66 (2) of the Income-tax Act, 1922 (hereinafter to be referred as the Act) for directing the Income-tax Appellate Tribunal, Madras Bench to refer the question of law to the High Court.

2. The question of law, which the appellant wanted to be referred was:

"Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in canceling the penalty of Rupees 35,000/- levied under Section 28 (1) (c) of the Indian Income-tax Act, 1922."

3. The respondent was a firm carrying on business of manufacturing silk, carbon papers, type-writer ribbons, liquor, spirituous drugs and chemicals etc. In respect of the assessment year 1955-56, the respondent has sent a return showing Rupees 51,214/- as taxable income. On looking into the accounts and other records, the Income-tax Officer made several additions to the amount shown in the return and ultimately fixed the total assessable income in the sum of Rupees 3,30,474/-. On appeal, the