JUDGMENT

PATHAK, J.:—This appeal, by special leave, is directed against a judgment of the Andhra Pradesh High Court, concerning the scope of Section 271 (1) (c) of the Income Tax Act, 1961.

2. The assessee is an Akbari contractor. It filed a return of its income for the assessment year 1959-60, disclosing a total turnover of Rs. 10,92,132 and an income of Rs. 7,704/-. The Income Tax Officer did not accept the correctness of the return. He found that on 12th December, 1957 and 16th January, 1958 the excess of expenditure over the disclosed available cash was Rs. 17,720/- and Rupees 65,066/- respectively. He also noticed several deposits, totalling Rupees 28,200/-, entered in the names of certain Sendhi shop-keepers. The assessees explanation that the excess expenditure was met from amounts deposited with him by some shop-keepers but not entered in his books was not accepted. The alternative explanation that expenditure incurred earlier had possibly been recorded later was also rejected. In regard to the cash deposits of Rs. 28,200/- the assessee explained that they represented amounts deposited with it as security. That explanation was rejected in so far as deposits totalling Rs. 21,000/- were concerned. The Income Tax Officer rejected the account books of the assessee and estimated the assessees income on an overall figure of Rs. 5,00,018/-. In appeal before the Appellate Assistant Commissioner and thereafter before the Income Tax Appellate Tribunal, the assessee succeeded in getting the assessed income reduced to Rs. 1,30,000/- in addition to the books profits. Penalty proceedings were taken against the assessee and the case was referred to the Inspecting Assistant Commissioner. The assessee reiterated the explanation which it had offered in the assessment proceedings. Predictably, the Inspecting Assistant Commissioner rejected the explanation and held that the items of cash deficit and cash deposits represented concealed income resulting from the suppressed yield and low selling rates mentioned in the books. He observed that the assessee had concealed the particulars of his income and furnished inaccurate particulars of it, and therefore he imposed a penalty of Rs. 75,000/- under Section 271 (1) (c) of the Income Tax Act, 1961. On appeal by the assessee, the Appellate Tribunal held that there was no positive material to establish that the cash deposits represented concealed income. In regard to the cash deficits, the appellate Tribunal noticed that for the assessment year 1957-58 an addition of Rs. 2,00,000/- had been made to the book profits, and it observed that some part of that amount could have been ploughed back into the business. It held that an amount of Rs. 90,000/- representing unledgerised cash credits of that year could be said to have been introduced in this year. Allowing the appeal, the Appellate Tribunal set aside the penalty order made by the Inspecting Assistant Commissioner.

3. At the instance of the Commissioner of Income Tax, the following question was referred to the High Court:-

"Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that no penalty is leviable?"

4. The High Court held that the Appellate Tribunal was not justified in holding that no penalty was leviable.

5. In this appeal, it is urged by learned counsel for the assessee that the High Court erred in interfering with a finding of fact, that the penalty proceedings being quasi-criminal the burden of proof lay on the revenue to establish that a penalty was attracted and that the intangible addition of Rs. 2,00,000/- represented real income and the Appellate Tribunal was right in considering that an amount of Rs. 90,000/- was available to cover the cash deficits.

6. Section 271 (1) (c) of the Income Tax Act, 1961 provides:-

"271 (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) & (b) ... ... ... ... ... ..