( 1 ) IN this reference under Section 256 (1) of the I. T. Act, 1961, the questions referred to this court are as follows:" (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that penalty under Section 271 (1) (a) of the I. T. Act, 1961, could be imposed ? (2) Whether the Tribunal was justified in holding that the period of the default for which the penalty under Section 271 (1) (a) is to be imposed should start from the date on which the return of income became due under Section 139 (1) of the Act?"

( 2 ) THE assessee is a registered firm. The reference relates to the assessment year 1964-65.

( 3 ) FOR this assessment year, the return of income was due to be filed under Sub-section (1) of Section 139 of the 1961 Act by the 30th June, 1964. A notice under Section 139 (2) was served on the 13th July, 1964, according to which the return was due to be filed in August, 1964.

( 4 ) THE return of income was filed only on the 27th October, 1965. Hence the ITO in course of the assessment proceedings, initiated action for penalty under Section 271 (1) (a ). The ITO did not accept the assessee's contention that