1. The question referred to this court under Section 256(1) of the Income-tax Act, 1961, by the Income-tax Appellate Tribunal, Gauhati Bench, Gauhati, is as follows :
' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner cancelling the penalty order of the Income-tax Officer under Section 271(1)(a) of the Income-tax Act, 1961, relating to the assessment year 1962-63, on the ground that there is vagueness in the penalty order of the Income-tax Officer and so the order cannot be said to be a legal and speaking order?'
2. A penalty of Rs. 16,120 had been levied by the Income-tax Officer, A-Ward, Digboi (Shri G.N. Hazarika) by his order dated March 16, 1969, under Section 271(1)(a) of the Income-tax Act, 1961, on the assessee, which is a registered firm, in respect of the assessment year 1962-63 in the following circumstances: The concerned income-tax return had been filed on December 11, 1963, but was returned by the Income-tax Officer for re-submission along with the profit and loss account and the balance-sheet; it was again filed on April 10, 1964. It is common ground that the return must be taken as having been filed on December 11, 1963, and that this is the relevant date for our present purpose.
3. A notice had, however, been issued under Section 139(2) of the Act; this was served on February 21, 1963; on this footing the return had to be filed within 30 days of the service of the said notice. Section 139(1) of the Income-tax Act provides for voluntary returns to be filed by the assessee as distinguished from Section 139(2), which provides for non-voluntary returns ; in the latter case the Income-tax Officer initiates action by the issue of a notice for submitting the return. Thus, it will be seen that there are two separate starting points of defaults in respect of the situations covered by Section 139(1) and Section 139(2) of the Act, respectively.
4. It is pertinent to notice, even at this stage, that the above-said Income-tax Officer does not appear to have adverted to this question of there being two separate starting points in respect of default in filing of the return under Section 139(1) and under Section 139(1) of the Income-tax Act. Having noted that the authorised representative of the assessee had mentioned to him that the return was filed on December 11, 1963, the Income-tax Officer, who was unable to find any application for extension of time for submission of return in the records as mentioned by the assessee, straightaway proceeded to make the assumption that the default in this case was for more than 14 months (on page 6 of the printed paper book; the expression ' four ' is an obvious error for ' fourteen '); in saying so, the Income-tax Officer obviously thought that the default arose under Section 139(1). The Income-tax Officer did not even realise that the default could not, in any case, be for more than 12 months. Mr. J. P. Bhattacharjee, learned counsel for the assessee, has brought to our notice the fact that, by a general notification, time for submission of returns had been extended by two months and this period of two months had also to be added to the period of six months (it is now only four months according to the later amendment of Section 139(1) of the Income-tax Act). In the first place, the Income-tax Officer had made a mistake in recording the period, of default as being ' more than 14 months ', whereas it should have been only 'more than 12 months', according to the computation of time, even if it fell within Section 139(1) of the Act. In the second place, the ncome-tax Officer did not also bear in mind the fact that a notice under Section 139(2) of the Act had been issued and this by itself gave the time to the assessee to file his return within 30 days after the service of the notice ; in this view of the matter there could not have been default of more than 7 months committed by the assessee in the matter of submitting the return.
5. The relevant provision, namely, Section 271--Failure to furnish returns, comply with notices, concealment of income, etc.--may now be read:
'271. Failure to furnish returns, comply with notices, concealment of income, etc.--(1) if the Income-tax Officer or the Appellate Assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person-
(a) has without reasonable cause failed to furnish the return of his total income which he was required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148 or has without reasonable cause, failed to furnish it within the time allowed and in the manner required by Sub-section (1) of Section 139 or by such notice, as the case may be, or
(b) has without reasonable cause failed to comply with a notice under Sub-section (1) of Section 142 or Sub-section (2) of Section 143, or
(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income,
he may direct that such person shall pay by way of penalty,--
(i) 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 per cent. of the tax for every monifn during which the default continued, but not exceeding in the aggregate fifty per cent. of the tax;
(ii) in the cases referred to in Clause (b), in addition to any tax payable by him, a sum which shall not be less than ten per cent. but which shall not exceed fifty per cent. of the amount of the tax, if any, which would have been avoided if the income returned by such person had been accepted as the correct income ;
(iii) in the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than twenty per cent. but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished......
(2) When the person liable to penalty is a registered firm or an unregistered firm which has been assessed under Clause (b) of Section 183, then, notwithstanding anything contained in the other provisions of this Act, the penalty imposable under Sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm.
(3) Notwithstanding anything contained in this section,--
(a) no penalty for failure to furnish the return of his total income under Sub-section (1) of Section 139 shall be imposed under Sub-section (1) on an assessee whose total income does not exceed the maximum amount not chargeable to tax in his case by one thousand five hundred rupees;
(b) where a person has failed to comply with a notice under subsection (2) of Section 139 or Section 148 and proves that he has no income liable to tax, the penalty imposable under Sub-section (1) shall not exceed twenty-five rupees ;
(c) no penalty shall be imposed under Sub-section (1) upon any person assessable under Clause (i) of Sub-section (1) of Section 160, read with Section 161, as the agent of a non-resident for failure to furnish the return under Sub-section (1) of Section 139.'
6. Mr. Talukdar, learned counsel for the revenue, contends that if there is any mistake in computation of the penalty, the same cannot be characterised as ' vagueness ', making the imposition of the penalty itself illegal, and that if the relevant date can be picked up from the records, that should be sufficient to validate the order. He relies, in this connection, upon the decision of a Division Bench of this court in Commissioner of Income-tax v. Smt. Ratna Kanti Bhuyan  103 ITR 397. But, a perusal of the said decision shows that there was no question raised in that case about the absence of a definite starting point (date of default) or even about the correctness of the amount imposed as penalty; the date of the commencement of the default alone had been mentioned in the' order of the Income-tax Officer, but the same could be picked up from the records. In such circumstances, the order imposing the penalty was held to be valid. That is not the case here. It is seen from the order pf the Tribunal (annexure 'C' in the printed paper book) that not only had the Income-tax Officer not mentioned the date of commencement of default, but it could not even be stated definitely when the default started. At page 16 of the Tribunal's order, the following finding appears :
'In this case, when the default started, cannot be said definitely. If the due date for return under Section 139(1) is take, the default will commence from December 1, 1962. If the default is taken from the date of service of notice under Section 139(2) then the default will commence from March 20, 1963. The Income-tax Officer has hot mentioned a word in his order whether he is taking the default from December 1, 1962, or from March 20, 1963. Again, the return was originally filed on December 11, 1963, and after removing all the defects it was subsequently filed on April 10, 1964. The Income-tax Officer has not mentioned as to which date he is taking for the submission of the return. Under the circumstances, there is vagueness in the order of the Income-tax Officer and the order cannot be said to be a legal and speaking order. On this ground alone the penalty order can be cancelled.'
7. Though the Tribunal characterised this situation as being vague (vagueness in the order of the Income-tax Officer), it seems apparent that the real import of the said finding is that vagueness was due to the fact that no precise starting point of time, relevant to the imposition of penalty, could be fixed and, hence, the same was invalid.
8. It seems to us that fixing precisely the starting point (commencement) of the default is basic to the imposition of penalty ; in other words, no valid penalty could be levied unless a definite starting point is found. It may be worth a repetition to state that the validity of the order of imposition of penalty would depend upon the fixing (finding) of a precise and definite starting point.
9. The Act makes a distinction between registered and unregistered firms. If a registered firm makes a default in the matter of filing a return, then the penalty on the said registered firm would, according to Section 271(2) of the Act, have to be treated for this purpose as an unregistered firm and the penalty would be higher. As provided under Section 271(1)(i), the amount of penalty in the instant case was to be levied at two per cent. of the tax for each month during which the default continued, but not exceeding, in the aggregate, fifty per cent. of the tax. The tax in this case was Rs. 58,439. The Tribunal has pointed out that as per the calculation chart available with the Income-tax Officer relating to this assessment year, the default in this case had been taken from October 1, 1962 to April 10, 1964, (the date of re-submission of return which was initially filed on December 11, 1963), namely, 18 months, and the penalty itself would then be Rs. 21,043. But the departmental representative had calculated the penalty for the default of 14 months on the tax of Rs. 58,439 at Rs. 16,362. The penalty imposed was, therefore, lesser than what was legally leviable. This would, according to Mr. Bhattacharjee, be yet another invalidating circumstance.
10. Mr. Bhattacharjee's submissions were two-fold: (i) that the imposition of the penalty was not according to law because of the absence of fixed starting point; (ii) that, in any case, the amount of penalty levied having been much lower than what it should have been even in this case, it was invalid.
11. Regarding the first submission, it is now well-settled that in a reference of this kind, where the High Court exercises advisory jurisdiction and does not function as a court of appeal, the finding of fact made by the Appellate Tribunal has to be accepted, except where, for instance, the finding itself is based on no evidence. (Vide  102 ITR 12 17--Anil Kumar Roy Chowdhury v. Commissioner of Income-tax). The finding of the Tribunal in this case, set out already, is that the starting point (commencement) of the period of default started could not be fixed definitely ; on this finding it would follow that there could not be a valid imposition of penalty in such a case. Even apart from this consideration, when there are two starting points and one of them is favourable to the assessee, the same cannot be avoided and the starting point which is less favourable chosen. It would not be the function of this court, in this reference, to indicate what should have been the starting point as a fact or what the Income-tax Officer should have chosen. It was for him to have given a definite finding regarding the starting point in respect of the default committed; this was a condition precedent to his passing a valid order of penalty arising out of such default.
12. Regarding the second submission, reliance was placed on the decision of a Division Bench of this court in Income-tax Reference No. 17 of 1914 (Commissioner of Income-tax v. Assam Travels Shipping Service to which one of us, Baharul Islam J., was a party. One of the points decided in that case was that if the amount of penalty imposed was lower than what had to be legally imposed, it would be invalid as being not according to law. Even on this ground the penalty imposed was not valid.
13. The answer to this question referred is, therefore, in the affirmative and against the revenue.
14. There will be no order as to costs.