( 1 ) THE following question is involved in this reference under Section 256 (1) of the I. T. Act, 1961 :"whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the IAC travelled beyond his jurisdiction, and accordingly, the penalty order passed by him was null and void ?"

( 2 ) THE penalty proceedings arose out of the assessment year 1963-64. The assessee is a firm. The facts stated by the Tribunal may be briefly stated as follows : the ITO brought Rs. 10,263 to tax as the assessee's income from undisclosed sources and issued a notice under Section 274 read with Section 271 (1) (c) of the Act to the assessee for concealment of Rs. 10,263 as its income. As the minimum penalty imposable on Rs. 10,263 exceeded Rs. 1,000, the ITO referred the penalty proceeding to the IAC before whom it was admitted by the assessee's representative that this amount was wrongly shown by the assessee's accountant in the balance-sheet without verifying the correct facts. The assessee's explanation was that this amount was shown by mistake in the balance-sheet as a partner of the assessee-firm who was looking after the accounts died suddenly and the cle