JUDGMENT 1. dipak kumar sen, J. Bhagwan Ltd. Calcutta, the assessee, was assessed to income-tax in the asst. yrs. 1959-60 and 1961-62 the relevant accounting years being the calendar years 1958 and 1960. The original assessments were completed on 23rd Feb., 1962 and 31st Jan., 1963. The said assessments have subsequently been modified on appeal before the AAC. 2. SUBSEQUENTLY the ITO initiated proceeding under s. 147(a) of the IT Act, 1961 on the ground that the assessee's income chargeable to tax has escaped assessment. In compliance with notices issued under s. 148 of the Act, the assessee filed fresh returns of income. The ITO held that a number of short terms loans and advances recorded in the accounts of the assessee were not genuine and the said amount represented assessee's concealed income. It was found that the alleged creditors had been carrying on the business of issuing spurious hundis. Accordingly the ITO treated the entire amount of the loans and advances as assessee's income form other sources and the same was brought to tax. The deduction of interest claimed to have been paid by the assessee against the said transactions were disallowed. Being aggrieved the assessee preferred appeals from the said orders of assessment before the AAC. The CIT(A) confirmed the addition made in the asst. yr. 1959-60 and in the subsequent asst. yr. 1961-62 the CIT(A)enhanced the income by Rs. 20,000 on the ground that the peak amount introduced in the account of the assessee as loans had not been correctly completed. 3. IN the meantime the ITO initiated proceedings for imposing penalty on the assessee under s. 274 of he IT Act, 1961 r/w s. 271 thereof. As the minimum penalty imposable in each of the years was thought to exceed Rs. 1,000 the ITO referred the matter to the IAC. The IAC. The IAC imposed penalties respectively of Rs. 2,07438 and Rs. 1,63,457 in respect of the said assessment years. 4. AGAINST the orders of the AAC upholding and enhancing the quantum of additions in the reassessment proceedings, assessee preferred appeals before the Tribunal. The Tribunal found on the facts that the reasons for which the ITO had reopened the assessment were not adequate and did not satisfy the requirements of s. 147 of he IT Act, 1961. The Tribunal accordingly set aside the orders of reassessment without going into the merits of the matter. The Tribunal found on the facts that the reasons for which the ITO had reopened the assessment were not adequate and did not satisfy the requirements of s. 147 of he IT Act, 1961. The Tribunal accordingly set aside the orders of reassessment without going into the merits of the matter. The assessee also filed appeals to the Tribunal against the order of the IAC imposing the penalty. The Tribunal found that as the order of reassessments for the said two assessment years made under s. 147 of the IT Act, 1961 on the basis of which penalties had been levied had been annulled, the penalties therefore cannot stand. The Tribunal directed cancellation of the orders of penalty. 5. ON an application of the Revenue under s. 256(1) of the IT Act, 1961 the following question has been referred as a question of law arising out of the order of the Tribunal for the opinion of this Court : "Whether on the facts and in the circumstances of the case the Tribunal was justified in cancelling the penalties imposed under s. 271(1) (c) of the IT Act, 1961?" 6. IT appears that the orders of reassessment on the basis of which penalty was levied on the assessee has been set aside by the Tribunal. Therefore, the order of penalty cannot stand by itself. In spite of opportunities given to the Revenue we have not been informed whether against the order of the Tribunal setting aside orders of reassessment any further proceedings have been initiated by the Revenue. In the absence of any such information we have to presume that the orders for reassessment stand annulled finally. The question is therefore answered in the affirmative and in favour of the assessee. There will be no order as to costs.