1. - This is an application under Sub-section (2) of Section 256 of the I.T. Act, 1961 (hereinafter referred to as "the Act"), for requiring the Income-tax Appellate Tribunal, Jaipur Bench, to state a case and refer the following question of law alleged to be arising out of its order dated July 23, 1974, namely :

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty of Rs. 6,090 imposed by the ITO Under Section 271(1)(a)?"

2. The respondent-assessee, M/s. Rawat Singh and Sons, Jodhpur, were required to file the return of their total income for the assessment year 1965-66, by September 30, 1965. They made an application for extension of time and were allowed to file the return by November 15, 1965. The return was, however, filed on December 21, 1965, showing a total income of Rs. 12,000 on estimated basis. The return was considered invalid as it was not accompanied by a copy of the profit and loss account, trading accounts, and balance-sheet. This fact was communicated to the assessee by the ITO on January 4, 1966. Thereafter, the assessee furnished a return on May 19, 1966, declaring an income of Rs. 89,338 along wi