Chinnappa Reddy, J.
1. The assessee filed a return for the assessment year 1967-68 declaring an income of Rs. 2,27,113. He did not pay the tax payable on self-assessment, nor did he subsequently pay the tax when assessment was made on provisional basis, within the prescribed period. Later on, the assessee appears to have paid substantial part of the tax levied. Thereafter, the Income-tax Officer levied a penalty of Rs. 17,000 under Section 140A(3). This was reduced to Rs. 10,000 by the Appellate Assistant Commissioner on the ground that the assessee was in financial difficulties. The Income-tax Appellate Tribunal deleted the penalty altogether on the ground that the assessee had ultimately paid the entire tax and the Government suffered no loss. At the instance of the revenue, the following question has been referred to us for our decision:
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the penalty of Rs. 10,000 levied under Section 140A(3) of the Income-tax Act, 1961 ?'
2. Shri Awasthy, learned counsel for the department, argues that the levy of penalty is automatic on the commission of a default by the assessee under Section 140A. There is no substance in this submission. There is a proviso to Section 140A(3) expressly providing for reasonable opportunity being given to the assessee before the levy of any such penalty which wouldbecome meaningless if levy of penalty is automatic. Shri Awasthy laysstress on the words 'shall be liable to pay'. But what the assessee isunder an obligation to pay as penalty is such amount as the Income-taxOfficer may direct. That necessarily implies that it is open to the Income-tax Officer to levy a penalty or not at all.
3. We, therefore, answer the question referred to us against the revenue.We are not expressing any opinion on the merits of the case. The referenceis answered accordingly. No costs.