( 1 ) THIS petition under Section 256 (2) of the Income Tax Act, 1961 has been filed by the Revenue for a direction to the Income Tax Appellate Tribunal relevant to the assessment year 1993-84 to state a case and refer 842 to this Court for its opinion the following question stated to be question of law:- "whether, on the facts and in the circumstances of the case, the Hon ble ITAT is correct in law in cancelling penalty of Rs. 2,00,890. 00 imposed under Section 271 (l) (c) of the Act?"

( 2 ) THE assessee firm carried on business in Hing, Jeera, dry fruits etc. , in Delhi and Bombay. The assessee filed its return of income for the previous year relevant to the assessment year 1983-84 on 28. 9. 83 declaring total income at Rs. 71,850. 00. The Income Tax Officer completed the assessment of the assessee on 25. 3. 86 computing that total income of the assessee at Rs. ll,27,429. 00. In the appeal before CIT (Appeals) the said amount was reduced and the assessee was finally assessed at Rs. 3,90,205. 00 on the basis of the order passed by the Income Tax Appellate Tribunal.

( 3 ) THEREAFTER the Income Tax Officer initiated a proceeding against the assessee under Section 271 (l)