JUDGMENT 1. - These three applications under section 256(2) of the Income-tax Act, 1961 (No. XLIII of 1961), which have been registered as D.B. Civil Income-tax Cases Nos. 55, 56 and 109 of 1981, relate to the assessment years 1973-74, 1972-73 and 1971-72, respectively. As all the three applications have arisen in identical circumstances and the assessee is the same, we consider it proper to dispose of them by a common order. 2. We shall notice the facts giving rise to D.B. Civil Income-tax Case No. 55 of 1981. 3. The petitioner-assessee is a partnership firm, having its office at jodhpur and carries on business in automobiles and automobile parts. The assessee, in each of the assessment years, allowed to its employee, Gopal Das, who was working as salesman of the firm, a commission of 5% on sales of automobile accessories and parts in lieu of remuneration for his services in addition to a salary of Rs. 250 per month. The commission was paid in accordance with the agreement dated November 11, 1969, between the said Gopal Das and the assessee. In the returns filed in respect of the assessment years under consideration, the assessee claimed the amount of commission paid to the said Gopal Das as business expenditure deductible from its gross income under section 36(1)(ii) of the Act. The Income-tax Officer, Special Ward, Jodhpur, disallowed the amount of commission claimed as business expenditure. On appeal by the assessee, the Appellate Assistant Commissioner, Jodhpur Range, jodhpur, accepted the appeal and deleted the disallowance of the amount of commission paid by the assessee to the said Gopal Das. It was held by the Appellate Assistant Commissioner that the payment of commission was a genuine payment for the business of the assessee and was thus an allowable business expenditure. The Income-tax Officer filed a further appeal before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ("the Tribunal" herein). The Tribunal set aside the order of the Appellate Assistant Commissioner of Income-tax and held that the amount of commission paid to Gopal Das was not an allowable business expenditure. In this connection, reliance was placed on Shazada Nand and Sons v. CIT (1973) 90 ITR 91 (P and H) . The Tribunal set aside the order of the Appellate Assistant Commissioner of Income-tax and held that the amount of commission paid to Gopal Das was not an allowable business expenditure. In this connection, reliance was placed on Shazada Nand and Sons v. CIT (1973) 90 ITR 91 (P and H) . Thereafter, the Income-tax Officer initiated penalty proceedings against the assessee in respect of the amount paid by the assessee to the said Gopal Das, which was disallowed as business expenditure by the Tribunal, and referred the matter to the Inspecting Assistant Commissioner, Jodhpur, for passing an appropriate order under section 271(1)(c) of the Act. The Inspecting Assistant Commissioner, on transfer of the penalty proceedings to him, imposed a penalty on the assessee under section 271(1)(c)(iii) of the Act. He was of the opinion that it was an ex gratia payment made by the assessee to the said Gopal Das. Thus, by claiming the commission paid to an employee by the assessee as an allowable business expenditure, the assessee concealed particulars of its income. 4. The assessee filed an appeal before the Tribunal against the order imposing penalty. The Tribunal dismissed the appeal and maintained the penalty imposed by the Inspecting Assistant Commissioner. 5. A reference application under section 256(1) of the Act was filed by the assessee requesting it to state the case and to refer the following questions of law arising out of its appellate order to this court for its opinion : " 1. Whether, on the facts and in the circumstances of the case, the findings of the Hon'ble Tribunal that the assessee was guilty of any fraud or gross or wilful neglect in returning the income after deducting the commission payments made to Shri Gopal Das is contrary to the weight of the record and was arrived at without considering the entire evidence and material on record ? 2. Whether, on the facts and in the circumstances of the case and in view of the provisions contained in section 271(1)(c) of the Income-tax Act, 1961, and the Explanation thereto, the Hon'ble Tribunal was right in law in sustaining the penalty imposed on the assessee ? 3. 2. Whether, on the facts and in the circumstances of the case and in view of the provisions contained in section 271(1)(c) of the Income-tax Act, 1961, and the Explanation thereto, the Hon'ble Tribunal was right in law in sustaining the penalty imposed on the assessee ? 3. Whether, on the facts and in the circumstances of the case and in view of the provisions contained in section 271(1)(c)/section 274(2) and its amendment with effect from April 1, 1976, the Hon'ble Tribunal was right in law in rejecting the assessee's contention that the learned Inspecting Assistant Commissioner of Income-tax had no jurisdiction to impose penalty upon the appellant? 4. Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal was right in law in holding that there is positive evidence on record to show that the assessee furnished inaccurate particulars of its income and the expenses claimed by the assessee are also bogus and whether such findings are contrary to the weight of the record and have been arrived at without properly considering the entire evidence and material on record ? 5. Whether, on the facts and in the circumstances of the case, the Hon'ble Tribunal is justified in sustaining the penalty and the alleged charges of furnishing inaccurate particulars of its income, although the learned Inspecting Assistant Commissioner had imposed penalty by holding that the assessee had concealed particulars of income? " 6. The facts in the other two Reference Applications Nos. 56 and 109 of 1981 under section 256(2) of the Act are almost identical and it is not necessary to state them in detail. The assessee had filed these applications under section 256(2) of the Act as the Tribunal has dismissed the applications under section 256(1) of the Act holding that no question of law arises out of its appellate order. 7. We have heard Mr. Rajesh Balia, learned counsel for the assessee, and Mr. K.R. Arora, learned counsel for the Revenue. We have also considered the appellate orders of the Tribunal by which it maintained the orders of imposition of penalty passed by the Inspecting Assistant Commissioner and also the provisions of section 271(1)(c) of the Act. 7. We have heard Mr. Rajesh Balia, learned counsel for the assessee, and Mr. K.R. Arora, learned counsel for the Revenue. We have also considered the appellate orders of the Tribunal by which it maintained the orders of imposition of penalty passed by the Inspecting Assistant Commissioner and also the provisions of section 271(1)(c) of the Act. In our opinion, the orders of the Tribunal dismissing the applications under section 256(1) of the Act are incorrect, and the appellate orders of the Tribunal do give rise to questions of law inasmuch as they involve the applicability of section 27](1)(c) and its Explanation, and further whether the findings of fact are to be reviewed by this court as there is no evidence to support it or material evidence on record has been ignored. The following questions of law arise out of the appellate orders passed by the Tribunal in all the three applications : " 1. Whether, on the facts and in the circumstances of the case, the finding of the Appellate Tribunal that the assessee was guilty of fraud or gross or wilful neglect in returning the income after deducting the commission paid by it to Gopal Das is contrary to the weight of the record and has been arrived at without considering the entire material? 2. Whether, on the facts and in the circumstances of the case, the Explanation to section 271(1)(c) of the Act is attracted ; and if the answer to this question is in the affirmative, whether, in view of the provisions of section 271(1)(c) of the Income-tax Act, 1961, and the Explanation thereto, the Appellate Tribunal was right in law in sustaining the penalty imposed on the assessee ? 3. Whether, on the facts and in the circumstances of the case and in view of the provisions contained in section 271(1)(c)/section 274(2) and its amendment with effect from April 1, 1976, the Appellate Tribunal was right in law in rejecting the assessee's contention that the Inspecting Assistant Commissioner of Income-tax has no right to impose penalty upon the assessee ? 4. 4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that there is positive evidence on record to show that the assessee had furnished inaccurate particulars of its income and that the expenses claimed by it are bogus and such finding is contrary to record and has been arrived at without considering the entire material ? 5. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in sustaining the penalty on the ground of furnishing inaccurate particulars of its income though the Inspecting Assistant Commissioner had imposed penalty on the ground that the assessee had concealed particulars of its income ? " 8. The three applications filed under section 256(2) of the Act in respect of the assessment years 1973-74, 1972-23 and 1971-72 are allowed and the Tribunal is directed to state the case and refer the questions of law mentioned by us in the preceding para for the opinion of this court. 9. We leave the parties to bear their own costs of these applications. *******