JUDGMENT Sen, J. : In this reference under Section 256 (1) of the Income-tax Act, 1961 at the instance of the Commissioner of Income-tax, West Bengal II, Calcutta, the point at issue is the calculation of penalty within the meaning of Section 271 (I) (a) (i). 2. For the assessment years 1951-62, 1962-63 and 1963-64, on account of delay in filling Income-tax returns, penalty was imposed on U.C, Kheruka, the assessee, by the Income-tax Officer. The penalty was sustained by the Appellate Assistant Commissioner on Appeal. When the matter came up before the Tribunal on further appeal by the assessee, a contention was raised for the first time that as there was no tax due on the date of levy of penalty, the demand having been met in the meantime, the penalty could not be calculated @ 2% with reference to any amount. The judgment of this Court in the case of (1) Commissioner of Income-tax, West Bengal-I v. Vegetable Products Ltd, reported in 80 Income-tax Reports at page 14 was relied on. The Tribunal applied the said decision and directed the Income-tax Officer to calculate the amount of penalty on tax outstanding on the date when the penalty was levied. 3. The following question has been referred to us from this order of the Tribunal : "Whether, on the facts and in the circumstances of the case, the penalty leviable within the meaning of section 271 (I) (a) (i) is with reference to the tax due under the demand notice or with reference to the amount, if any, due on the date of the levy of penalty." 4. We note that the judgment of this Court in the case referred to above has been affirmed by the Supreme Court in 88 ITR at page 192. But so far as we are concerned the matter has been set at rest by amendment of the section in question which is as follows : "13. We note that the judgment of this Court in the case referred to above has been affirmed by the Supreme Court in 88 ITR at page 192. But so far as we are concerned the matter has been set at rest by amendment of the section in question which is as follows : "13. Amendment of section 271.–In section 271 of the Income-tax Act, for clause (i) of sub-section (1), the following clause shall be substituted and shall be deemed always to have been substituted, namely :– "(1) in the cases referred to in clause (a) in addition to the amount of the tax, if any, payable by him, a sum equal to two percent, of the assessed tax for every month during which the default continued, but not exceeding in the aggregate fifty per cent. of the assessed tax. Explanation.–In this clause "assessed tax" means tax as reduced by the sum, if any, deducted at source under Chapter XVII-B or paid in advance under Chapter XVII-C. 5. By the Direct Taxes (Amendment) Act, 1974 the language of the section expressly makes the operation of the section retrospective and it will govern all cases prior to its incorporation. 6. In view of this we hold that penalty leviable in the instant case is neither with reference to tax due under the demand notice nor with reference to the amount, if any, due on the date of levy of penalty but would be leviable in terms of the said section. 7. We return our answer accordingly. In the facts and circumstances of the case there will be no order as to costs. Deb, J. : I agree.