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Issues:
1. Justification of canceling penalty under section 273(c) of the Income-tax Act. Detailed Analysis: The case involved an application under section 256(1) of the Income-tax Act, 1961, filed by the Revenue, questioning the cancellation of a penalty of Rs. 11,000 imposed under section 273(c) of the Act. The assessee had received a notice of demand for payment of advance tax, and despite filing a return declaring income, the assessment was completed at a higher income. The assessee explained that the major source of income was share income from a firm, and reasons preventing the firm from filing an estimate also applied to the assessee. The Income-tax Officer imposed the penalty, which was later set aside by the Commissioner of Income-tax (Appeals). The Income-tax Appellate Tribunal dismissed the Revenue's appeal, leading to the application for reference to the High Court. The Tribunal had refused to make a reference to the High Court, stating that the correctness of the explanation furnished by the assessee was a question of fact, not a question of law. The High Court, after hearing arguments from both parties' counsels, noted that the Tribunal's finding regarding the assessee's explanation for not paying advance tax due to a search conducted on the business premises was not disputed. The Court agreed with the Tribunal that no question of law arose from its order. Therefore, the reference application was dismissed, and no costs were awarded. In conclusion, the High Court upheld the Tribunal's decision, emphasizing that the explanation provided by the assessee for the delay in paying advance tax was valid due to the search conducted on the business premises. The Court affirmed that the matter was a question of fact, and no legal issue arose from the Tribunal's order, leading to the dismissal of the reference application by the Revenue.
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