(1) THESE appeals are preferred by the Revenue against the judgment of the Allahabad High court answering the question in favour of the assessee and against the Revenue. These appeals are preferred on a certificate granted by the High court and the only question in respect of which the certificate is granted is:

"WHETHER on the facts and circumstances of the case, the tribunal was right in holding that no penalty could be imposed with reference to the cash deposits on the principle of Anwar Ali case even after the amendment of Section 271 in 1964."

(2) THE assessment years concerned herein are 1962-63, 1963-64, 1965-66, 1966-67 and 1967-68. The assessee is an individual running a tea-stall in Nainital. The returns filed by him were not accepted and assessment completed on best judgment. Subsequently, certain information came in possession of the Department which indicated concealment of income in respect of those years. A 1 COMMISSIONER OF INCOME TAX v. Anwar Ali, 1970 2 SCC 185 : 76 ITR 696 notice under Section 148 was issued to the assessee in response to which he filed revised returns. In the revised returns, he disclosed the interest received by him on certain cash deposits which deposits were not disclosed in the earlier returns. Reassessment was completed, whereafter proceedings were initiated under Section 271(1(c) of the Act. It is not really necessary for us to state the several facts of the case except to mention that the question before the High Court was whether the Explanation to Ss. (1 of Section 271, added by the Finance Act, 1964 with effect from 1/4/1964, makes any difference to the position of law obtaining till then, as explained in this courts decision in COMMISSIONER OF INCOME TAX v. Anwar Ali . The Explanation introduced in 1964 reads as follows:

"EXPLANATION.- Where the total income returned by any person is less than eighty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under Section 143 or Section 144 or Section 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income for the purposes of clause (c) of this sub-section."

(3) THE High court is of the opinion that introduction of the Explanation does not make any difference to the principles enunciated in Anwar Ati case .

(4) ANWAR Ali dealt with Section 28(1(c) of the Indian Income Tax Act,1922. Section 28(1(c) insofar as is relevant read as follows:

"28. Penalty for concealment of income or improper distribution of profits.- (1 If the Income Tax Officer, the Appellate Assistant Commissioner or the Appellate tribunal in the course of any proceedings under this Act, is satisfied that any person- (a)-(b) * * * (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income...."

(5) SECTION 271(1(c) of the Income Tax Act, 1961, as originally enacted, was to the same effect. By Finance Act, 1964, however, the word deliberatelyoccurring in clause (c) was omitted and the Explanation aforementioned was added. The question is whether the principles enunciated in Anwar Ali continue to be good law even after the aforesaid amendment effected by the Finance Act, 1964.

(6) THE following principles were enunciated in Anwar Ali :

(A) The proceedings under Section 28 are penal in character.

(B) It is for the department to establish that the receipt of the amount in dispute constitutes income of the assessee and that the assessee has concealed the particulars of his income or deliberately furnished inadequate particulars