JUDGMENT 1. - This is an application filed by the Commissioner of Income Tax, Rajasthan, Jaipur under section 256(2) of the Income Tax Act, 1961, hereinafter called 'the Act', praying that the Tribunal may be directed to refer the following question:- "Whether on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty levied under Section 271(1) of the I.T. Act, 1961." 2. The facts giving rise to this matter are as follows: M/s. Madira Kriya Vikriya Sangh, Kota in the ordinary course should have filed its returns with the Income Tax Officer by 31st December, 1966 to which date the extension was allowed by the Income Tax Officer, but instead of doing so the returns were filed on 5th June, 1967. The Income Tax Officer commenced proceedings under section 271(1)(a) of the Act to levy penalty for the late filing of the returns. Vide its order dated 17th March, 1971 the Income Tax Officer imposed a penalty of Rs. 13,408/- which amount according to him was equal to 2% per month of payable demand for 5 completed months. An appeal was filed before the Appellate Assistant Commissioner by the assessee and an affidavit purporting to have been sworn by Munim chand Mal Jain was also filed showing a reasonable cause why the returns were filed late. Appellate Assistant Commissioner rejected the appeal of the assessee. A second appeal was preferred before the Income Tax Appellate Tribunal, Jaipur. The Appellate Tribunal observed that no doubt the Munim failed to file the prescription of the doctor along with his affidavit but the explanation given by the assessee explaining the delay in filing the returns, does not appear to him absurd on the face of it and, therefore, it could not be rejected by the Income Tax Officer. While setting aside the penalty the Tribunal expressed itself in the following words:- "The explanation given by the assessee seems to be quite reasonable. After rejecting the explanation of the assessee, on behalf of the department, nothing has been brought on record to show that the assessee without any reasonable cause failed to furnish the return in time. According to the ratio of the decisions in the case of Dawan & Co. After rejecting the explanation of the assessee, on behalf of the department, nothing has been brought on record to show that the assessee without any reasonable cause failed to furnish the return in time. According to the ratio of the decisions in the case of Dawan & Co. v. CIT 87 ITR 71 and P.V. Devassy v. C.I.T. 84 ITR 502 , it was the duty of the department to establish that the essessee has without any reasonable cause failed to furnish the return in time. In the case before us the department failed to do so. In the absence of such material on record, the finding of the Appellate Assistant Commissioner could hardly be sustained." 3. The department having felt aggrieved by the said order of the Tribunal made an application before the Tribunal under section 256(1) of the Act to refer the above referred question to the High Court. The Tribunal after hearing the parties and considering the material on the record observed that there was reasonable cause which prevented the assessee from filing the returns in time and this being essentially a finding of fact, the question could not be referred under the provisions of section 256(1) of the Act. The Department in these circumstances has filed this application under section 256(2) of the Act. 4. The question argued before us by the learned counsel for the Revenue is that the affidavit filed by Munim Chand Mal Jain was not verified by the Notary Public which was the proper authority to do so and as it was verified by the Oath Commissioner who had no jurisdiction to verify the affidavits to be filed before the Income Tax authorities and the affidavit was not admissible in evidence and this being a question of law that the order of the Tribunal is based on an inadmissible evidence the matter should have been referred to this Court. It was also urged that since the Tribunal has accepted certain facts mentioned in the inadmissible affidavit, the order of the Tribunal is vitiated. In support of this argument reliance has been placed by the learned counsel on Dhirajlal Girdharilal v. Commissioner of Income tax, (1954) 26 ITR 736 Bombay and on certain observations in Palkhiwala's Income tax Act Vol. I page 1007. 5. Mr. In support of this argument reliance has been placed by the learned counsel on Dhirajlal Girdharilal v. Commissioner of Income tax, (1954) 26 ITR 736 Bombay and on certain observations in Palkhiwala's Income tax Act Vol. I page 1007. 5. Mr. Mehta appearing on behalf of the assessee on the other hand urged that if the order of the Tribunal rejecting the revenue's claim to refer the matter to this Court is perused minutely then no doubt is left that both the Income Tax officer and the Tribunal considered the explanation submitted by the assessee before the I.T.o. justifying the delay in submitting the returns and the Tribunal was competent under the scheme of the Act to accept any explanation which was already before the Income tax officer and as such the finding of Tribunal is nothing but essentially a finding of fact and, therefore, no reference can lie to this Court. While meeting another argument of the revenue, it was urged by Mr. Mehta that the other questions were neither raised by the revenue before the Tribunal while pressing its application under section 256(1) of the Act nor did these question arise out of the order passed by the tribunal rejecting the application of the Revenue under section 256(1) and, therefore, this Court has no jurisdiction while deciding the application under section 256(2) to take such objections into consideration. 6. The order of the Income Tax Officer leaving penalty on the assessee for filing late returns has been placed on record and is marked as Ex. A. In this order it has been specifically mentioned by the Income tax Officer in the last line of para 2 that, "a written explanation was submitted before me which has got no force." It is true that this explanation was not substantiated by any evidence or affidavit. The affidavit no doubt was filed for the first time to substantiate the explanation when the matter came up before the Appellant Assistant Commissioner. It is also not disputed by the learned counsel for the parties that the affidavit was not admissible in evidence as it was not properly shown in by a competent authority. But that defect of the affidavit makes it inadmissible and cannot be pressed into service to substantiate the explanation already lying before the Income Tax Officer. It is also not disputed by the learned counsel for the parties that the affidavit was not admissible in evidence as it was not properly shown in by a competent authority. But that defect of the affidavit makes it inadmissible and cannot be pressed into service to substantiate the explanation already lying before the Income Tax Officer. The Tribunal while dealing with the appeal of the assessee took into consideration the contents of the affidavit which supported the explanation of the assessee and observed, "no doubt that the Munim failed to file the prescription of the Doctor, but in the absence of such prescription the explanation given by the assessee, if it is not absurd on the face of it could not be rejected". These observations clearly show that the Tribunal was conscious of the fact that apart from the affidavit there was on the record some explanation of the assessee which could be taken into consideration to decide the point in issue before it. While making the above observation the Tribunal was referring to the explanation which was also considered by the Income tax Officer and for which the Income tax Officer had observed that it had no force. The explanation which was submitted by the assessee before the Income Tax officer has not been placed before us nor was it necessary for us to look into it as we cannot go into the merit's of that explanation which after consideration had been judged and accepted by the Tribunal. This fact is certain that the Income Tax officer had some explanation from the assessee before him which explained the delay in filing the returns. That explanation was considered without any force by Income Tax Officer but the same was found sufficient by the Tribunal to dispose of the notice under section 271 of the Act. It cannot be denied that the Tribunal had jurisdiction to take into consideration an explanation which was rejected by6 the Income Tax officer while deciding the second appeal of the assessee. If the Tribunal came to the conclusion that the explanation of the assessee had sufficient weight and was not absurd then it was competent for the Tribunal to set aside the penalty imposed by the Income tax Officer. This decision of the Tribunal which was based purely on question of fact did not involve any question of law. If the Tribunal came to the conclusion that the explanation of the assessee had sufficient weight and was not absurd then it was competent for the Tribunal to set aside the penalty imposed by the Income tax Officer. This decision of the Tribunal which was based purely on question of fact did not involve any question of law. In this view of the matter we agree with the observations of the Revenue under section 256(1) that the finding recorded by the Tribunal was essentially a finding of fact and as such it did not call for any reference to this Court. 7. The argument of learned counsel for the Revenue that the affidavit which was inadmissible in evidence was taken into consideration by the Tribunal and, therefore, it by itself raises a question of law which calls for a reference under section 256(2) of the Act. We have carefully considered the judgement of the Tribunal in the second appeal filed before it and we find that the Tribunal did not attach any importance to the contents of the affidavit of Shri Chandmal Jain Munim but simply accepted the explanation given by the assessee, before the Income tax officer and therefore, in our opinion this question which was never raised before, the Tribunal also does not raise that the judgement of the Tribunal is based on an inadmissible evidence giving rise to a question of law. In this view of the matter we feel that the arguments advanced in this connection have hardly any relevance to the circumstances and question in issue in this case. 8. We, therefore reject the application under section 256(2) of the Act. *******