1. ' V.V. KAMAT, J.---This is an application by the Revenue under section 261 of the Income Tax Act, 1961, for a certificate of fitness for appeal to the Supreme Court. On hearing learned counsel for the Revenue as well as for the assessee and considering the judgment in regard to which the petition is made before us, we feel that this is a fit case for an appeal to the Supreme Court of India.
2. ' The crucial question is as to whether on the facts which are crystallised both in the majority judgment as well as in the minority judgment, it could be said that there was a valid reference under section 274(2) to the inspecting Assistant Commissioner. The majority judgment as well as the minority judgment considered the question differently on the basis of decisions cited and considered (CIT v. Late S.M. Syed Muhammad (1995) 216 ITR 331 (Ker) (FB)).
3. ' The necessary final facts for considering the application of the provisions of section 274(2) of the Act would be that on March 30, 1976, the Income-tax Officer completed the assessment and simultaneously issued orders of initiation of penalty proceedings. On the same day, the assessee was communicated the steps taken as above. On the next day (March 31, 1976), the Inspecting Assistant Commissioner was communicated by correspondence in the form of a letter. The said communication had reached the Inspecting Assistant Commissioner on April 1, 1976. On the same day (April 1, 1976), the statutory provision requiring the reference came to be deleted. In the light of this factual matrix, two divergent views require consideration and the question is a substantial question of public importance because it will determine as to whether the proceedings of penalty could be said to be a pending matter before the Inspecting Assistant Commissioner under the above circumstances and consequently whether he would be having the necessary powers and/or jurisdiction to continue to act on the basis of the reference as above. ' grant the necessary certificate under section 261 of the Income Tax Act, 1961, for the above reasons and circumstances.