JUDGMENT

SABYASACHI MUKHARJI, C.J.I:- This is an appeal by special leave from the judgment and order of the Madras High Court dated 9th March, 1977. The appeal involves the assessment of income-tax under the Income-tax Act, 1961 (hereinafter referred to as the Act) for the assessment year 1966-67. The assessee is an individual who carried on business in distribution of films for the assessment year 1966-67. The assessee filed a return of income on 12th July, 1969 declaring "No loss". Subsequently, the assessee filed a revised return on 4th January, 1969 declaring a net loss of Rs. 9,490/- The Income-tax Officer called for wealth statements from the assessee. The wealth statements did not reveal that the assessee had invested any amount in the plot of land in T. Nagar. However, a raid made in the premises of E. V. Saroja and K. R. Sadayappan revealed the information that the assessee along with Smt. P. S. S. Ekammai Achi and A. L. M. Perianna Chettiar had purchased a plot of land in T. Nagar on 13-4-1965 from Smt. K. V. Saroja. The plot was purchased in the name of the, assessees son Sri Ramkrishnan.

2. In the assessment, it was stated that the total consideration was Rs. 80,000/- out of which Rs.25,000/- was the payment in respect of the portion purchased in the name of Sri Ramkrishnan. The examination of all the materials including the document revealed that the total consideration was Rupees 1,40,000/-. The on-money payment made by the assessee on behalf of his son was Rs. 18,750/- for which the assessee could not adduce evidence to prove the nature and source of investment. This sum of Rs. 18750 was treated by the Income-tax Officer as the undisclosed income of the assessee and he initiated penalty proceedings under S. 27 1(1) (c) of the Act for concealment of income and referred the case to the I.A.C. for disposal as the minimum penalty leviable exceeded Rs. 1,000/-. The I.A.C. imposed a penalty of Rs. 18,750/- being equal to the income concealed holding that the assessee had not discharged the burden cast upon him by the Explanation to S. 27 1 (1)(c) of the Act in not adducing any evidence that the plot was purchased by the assessees son out of his own funds and against the assessees own statement recorded on 9-10-1972 that the on money payment was made by him. The assessee filed an appeal to the Tribunal and contended that in case of rejection of assessees explanation for the source, the addition could not be held to be the concealed income of the assessee, and relied on certain principles laid down by the Courts. The Tribunal allowed the appeal. It is necessary to refer to relevant portions of the Tribunals order in respect of which certain contentions were urged before us. The Tribunal in its order observed, inter alia, as follows:-

"We have considered the rival submissions. At first we were impressed by the argument of the Departmental Representative that it is a fit case for the levy of penalty. However, when we find that the assessee had at no time 91 an any false or different particulars about this property in his return of income or at any time during the assessment proceedings, there cannot be any question of his having filed any incorrect particulars and more so of the income. The Departmental Representative was unable to point out any occasion when the assessee has stated before the Income-tax Officer during the assessment proceedings that he had purchased the property only for Rs. 80,000/ -. On the other hand, when he was asked to state the consideration of the property during the examination, he accepted that there were two agreements but the real consideration was Rs. 1,40,000 / -. That being so, we are unable to accept that the assessee had been wilfully negligent or fraudulent in this regard. Then the question arises as to any concealment in the addition made by the Departmental as income from undisclosed sources. Here, the assessees case was that he had prepared a sort of cash statements to show that there