JUDGMENT

P. N. BHAGWATI, J. :— This appeal arises out of proceedings initiated by the Revenue authorities for levying penalty on the assessee. The assessee is a lady and during the assessment year 1964-65 for which the relevant accounting year was the calendar year ended 31st December, 1963, the assessee was a partner in two partnership firms, M/s. Malabar Tile Works and M/s. Malabar Plywood Works and along with her there were other partners including her husband and minor daughter. The assessee filed a return of income for the assessment year 1964-65 showing Rs. 4754/- as income from property and Rs. 4748/- as income from other sources. The assessee stated in the return under the column "Profits and Gains of Business and Profession" against item (b) which required share in the profits of a registered firm to be shown "please ascertain from the firms files the Malabar Tile Works and Malabar Plywood Works". The assessee, however, did not show in the return the amounts representing the shares of her husband and minor daughter in the firms of M/s. Malabar Tile Works and M/s. Malabar Plywood Works though they were clearly includible in computing the total income of the assessee under Section 64 sub-section (1) Cls. (i) and (iii) of the Income-tax Act, 1961. The Income-tax Officer while making the assessment included the amounts representing the shares of the assessees husband and minor daughter in the profits of these two firms in the assessment of the assessee and taxed the assessee on a total income of Rs. 59,506/- after including these amounts. Since the assessee had not shown these amounts as forming part of her total income in the return submitted by her, though they were clearly includible in her total income under Section 64, sub-section (1) Clauses (i) and (iii), the Income-tax Officer was of the view that the assessee had concealed the particulars of her income and rendered herself liable to penalty under Section 271 sub-section (1) clause (c), and since the minimum penalty leviable on the assessee was Rs. 1000/-, he referred the case to the Assistant Appellate Commissioner who issued notice under Section 274 and after hearing the assessee, imposed a penalty of Rs. 7000/-. The assessee appealed to the Tribunal against the order imposing penalty and one of the arguments urged on behalf of the assessee in support of the appeal was that there was no obligation of the assessee to show in her return the amounts representing the shares of her husband and minor daughter in the two firms and there was accordingly no concealment by her of the particulars of her income so as to attract the penalty under Section 271 sub-section (1) Cl. (C). The Tribunal accepted this argument of the assessee and held that S. 271 sub-sec. (1) Cl. (c) could be invoked only if there was concealment of the "particulars of his income by the assessee" and the words "his income" referred only to the income of the assessee himself and not to the income of any other person which might be liable to be included in the income of the assessee by reason of S. 64 sub-section (1) Cls. (i) and (iii). The Tribunal accordingly held that the omission or failure of the assessee to disclose in her return the amounts representing the shares of her husband and minor daughter in the two firms as forming part of her income could not be visited with penalty under Section 271 sub-section (1) Cl. (c) and in this view, the Tribunal allowed the appeal and set aside the order imposing penalty. This led to the filing of an application for a reference by the Revenue and on the application, the Tribunal referred the following question of law for the opinion of the High Court:

"Whether on the facts and in the circumstances of the case, the Tribunal is correct in law in cancelling the penalty levied under Section 271 (1) (c)?"

The High Court took the view that the words used in Section 271 sub-sec. (1) Cl. (c) were "his income" and the amounts representing the shares of the assessees hus