JUDGMENT NASIR A. ZAHID, J.-r1. The question referred to us for our opinion in this case is as follows:- - "Whether on the facts and in the circumstances of case the Income Tax Appellate Tribunal was justified in holding that the assessee was not in default on the date when penalty under section 46(1) of the Income Tax Act was imposed?" The brief facts, as given in the statement of the case, are that the respondent/assessee was in default in the payment of outstanding taxes and consequently the Income Tax Officer imposed a penalty of Rs. 3,000/- on 16th April, 1969. In an appeal before the Tribunal it was argued that after the imposition of this penalty the respondent was granted stay by the Commissioner of Income Tax on 26th April, 1969 and as a result thereof obtained stay in respect of 50% of the outstanding demand till the decision of the appeal. The assessee was thus required to pay only the balance of 50% of the tax. It appears that the order dated 26th April, 1969 passed by the Commissioner of Income Tax was complied with. Later on the Tribunal, by its judgment dated 29th January, 1971, vacated the penalty imposed by the Assessing Officer under section 46(1) of the Income Tax Act, 1922. In the circumstances, the present application under section 66.(1) of the Income Tax Act was moved by the department before the Tribunal, which has referred the aforesaid question for our opinion. We have heard Mrs. Rashida Patel, learned counsel for the applicant and Mr. Ali Athar, learned counsel for the respondent.
2. The facts, which are on record, require reframing of the question and accordingly we reframe the question as follows:-- "Whether on the facts and in the circumstances of the case the Income Tax Tribunal was justified in waiving the penalty on the assessee?" From the statement of the case it is apparent that on account of default in payment of outstanding taxes, the Income Tax Officer had imposed a penalty of Rs. 5,000/- on 16th April, 1969. An order was passed by the Commissioner of Income Tax granting stay in respect of 50% of the outstanding demand till the decision of the appeal. As observed earlier, it appears that 50% of the outstanding demand was met and in respect of balance 50% there was a stay. In these circumstances, the Income Tax Tribunal waived the penalty. Apparently the penalty was waived for the reason that against the demand and penalty a stay had been granted by the Commissioner of Income Tax on terms, which terms were complied with by the assesses We are of the view that the decision of the Tribunal in waiving the penalty was not unjustified and in the circumstances the reframed question is answered in the affirmative.