RAM RATTAN, A.M. - This appeal by assessee is directed against order of AAC sustaining penalty of Rs. 3,900 out of penalty of Rs. 5,965 imposed by ITO under s. 271(1) (a) of IT Act. Under s. 139(1) of Act, assessee was required to file return of its total income sou motu on or before 31st July, 1979 whereas it was actually filed on 14th Oct., 1981. There was thus delay of 26 complete months. ITO, therefore, initiated penalty proceedings under s. 271(1)(a) of Act and imposed penalty of Rs. 5,965 as assessee failed to furnish any explanation before him in spite of repeated opportunities given to him. AAC on appeal has held that penalty was eligible but reduced penalty imposable to Rs. 3,900. assessee is aggrieved against order of AAC. legal ground was raised before us submitting that no penalty was exigible in this case. It has been contended that on basis of registered firm, assessed tax as defined in Explanation below s. 271 (1) (a) (i) (b) is determined to be nil and, therefore, no penalty is exigible by invoking provisions of sub-s. (2) of s. 271 treating firm as unregistered. Reliance in this connection has been placed on decision of madras High Court reported in Addl. CIT vs. Murugan Timber Depot 1978 CTR (Med) 58: (1978) 113 ITR 99 (Med) and Gauhati High Court reported as CIT vs. Maskara Tea Estate (1981) 21 CTR (Gau) 47: (1981) 130 ITR 955 (Gau) and CIT vs. Ganesh Das Sreeram (Firm) (1982) 30 CTR (Gau) 302: (1983) 141 ITR 946 (Gau). ld. Departmental Representative, on other hand, contended that penalty was exigible in view of judgment of Punjab and Haryana High Court reported in Hindustan Steel Forgings vs. CIT (1980) 14 CTR (P&H) 389: (1980) 121 ITR 793 (P&H) and Calcutta High Court in CIT vs. Priya Gopal Bishoyee (1981) 20 CTR (Cal) 242: (1981) 127 ITR 778 (Cal). He also relied on decision f Supreme Court reported in CIT vs. S.V. angidi Chettiar (1962) ITR 739 (SC) contending that Hon ble Supreme Court had in this case held that in case of registered firm penalty for late filing of return was to be levied treating it as unregistered firm even though no tax was to be payable in case of registered firm. We have carefully considered rival sub-missions. We have gone through judgment of Punjab and Haryana High Court relied on by Revenue i.e. (1980) 14 CTR (P&H) 389: (1980) 121 ITR 793 (P&H). In this case, issue involved was about constitutional validity of s. 271 (2) of Act and not in regard to issue before us. ld. counsel for assessee had also tried to distinguish decision of Supreme Court in (1962) 44 ITR 739 (SC). It was urged on behalf of assessee that in case issue involved was whether Revenue could impose penalty under s. 28(1) (c) of Indian I T Act, 1922 corresponding to s. 27(1) (c) of IT Act, 1961 on firm which w s dissolved at time of imposing penalty. ld. counsel for assessee therefore, contended that this was not issue involved in present. proceedings. We agree with ld. counsel for assessee. ratio of Supreme Court judgment is, therefore, not applicable to facts of case before us. Similarly, ratio of decision of Hon ble Punjab and Haryana High Court in (1980) 14 CTR (P&H) 389: (1980) 121 ITR 973 (P&H) is also not applicable to facts of case. Gauhati and Madras High Courts have clearly held that where tax assessed is found to be nil in case of registered firm, resort cannot be have to provision contained in sub-s. (2) of s. 271 for purpose of calculating penalty treating firm as unregistered. Hon ble Supreme Court in case of CIT vs. Vegetable Products 1973 CTR (SC) 177: (1973) 88 ITR 192 (SC) has held that where two plausible views are possible, on issue, one in favour of subjects should be adopted. In view of judgment of Madras and Gauhati High Courts, which are in favour of assessee, we hold that no penalty was exigible as tax assessed in case of assessee on basis of registered firm was nil, In such circumstances, we cancel penalty sustained by AAC. In result, appeal is allowed. *** HARNAM DASS JAGAN NATH v. INCOME TAX OFFICER