1 Accepting revenue's prayer for a reference in terms of S.256(1) of the Income Tax Act, 1961 (in short the Act), Income Tax Appellate Tribunal, Cochin Bench (in short, the Tribunal) has referred the following questions for the opinion of this Court:
 "1. Whether, on the facts and in the circumstances of the case, Tribunal is right in law and fact in cancelling the penalty levied under S.271B of the I.T. Act?
 2. Whether, interpretation of the Amnesty Scheme/Circulars by the Tribunal is correct?
 3. Whether, on the facts and in the circumstances of the case, Tribunal is right in law and fact in holding that even on merit the penalty is not leviable?"

2 Factual background, as set out in statement of case, is almost undisputed and is as follows: For assessment year 1985-86, assessee filed return of income on 31.3.1987 declaring total income of Rs. 2,25,000/-. Return was filed under the 'amnesty scheme'. Income declared was on estimated basis on a turnover of Rs. 2,69,32,671/-. Assessment was completed on a total income of Rs. 2,50,000/-. As turnover had exceeded Rs. 40,00,000/-, assessee was required to get its accounts audited in terms of S.44AC of the Act. As it had not been done, pe