G.S.Singhvi, J.

1. On an application made by the Revenue under Section 256(1) of the Income-tax

Act, 1961 (for short, "the Act"), the Income-tax Appellate Tribunal, Delhi Bench "B" Delhi (for short, "the Tribunal") has referred the following question of law for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in confirming the order of the learned Commissioner of Income-tax (Appeals), Karnal, who deleted the penalty of Rs. 1 lakh imposed under Section 271B of the Income-tax Act, 1961 by the Assessing Officer?"

2. The assessee is engaged in the sale of milk. For the assessment year 1985-86, its turnover was more than Rs. 40 lakhs. Therefore, in terms of Section 44AB of the Act. it was required to file return latest by July 31, 1985 (the date was extended to September 30, 1985, by the Central Board of Direct Taxes vide its Circular No. 422 dated June 19, 1985 (see [1985] 155 ITR (St.) 44)). However, the return was actually filed on November 29, 1985. The same was accompanied by the audit report prepared by the chartered accountant, namely, M/s. Rajesh Behl and Associates. Later on, the a