The court's decision was influenced by the interpretation of the Explanation to Section 271 (1) (c) of the I. T. Act, 1961, and the finding that there was no concealment or furnishing of inaccurate particulars.

( 1 ) IN this reference Under Section 256 (1) of the I. T. Act, 1961, the following question has been referred to this court :"whether, on the facts and in the circumstances of the case, and on a correct interpretation of the Explanation to Section 271 (1) (c) of the I. T. Act, 1961, the Tribunal was justified in holding that no penalty Under Section 271 (1) (c) could be imposed ?"

( 2 ) THE Tribunal discussing this appeal observed in the statement of the case as follows:"aggrieved by the imposition of penalty the assessee came up in appeal before the Appellate Tribunal. The Appellate Tribunal considered the submission of the assessee's learned counsel, Shri Das, that the cash deposits were deleted from the assessee's total income by the AAC and, therefore, even if the addition on account of these cash deposits was restored by the Appellate Tribunal in the quantum appeal, held that it was at best an item in respect of which two opinions were possible and there can be no question of any concealment or furnishing of inaccurate particulars or fraud or gross or wilful neglect on the part of the assessee on this account. The Appellate Tribunal also held that the departmental representative was not able to show that apart from the absence or inadequacy of the explanation regarding the nature and source of the cash deposits which were treated as the assessee's income there was any other material to show that the account represented by the cash deposits was the assessee's taxable income of this year. Another finding of the Appellate Tribunal was that the only other items which accounted for the difference between the total income shown in the return and the total income assessed were expenses which were claimed as deduction in computing the income but were disallowed in the assessment which as laid down by the Explanation to Section 271 (1) (c) have to be excluded for the purpose of determining whether the Explanation is applicable and estimated income of Rs. 8,000 in Pakistan subject to rectification on production of Pakistan assessment order which is not liable to tax here in view of the Indo-Pakistan Avoidance Agreement and was besides an estimate and that too subject to rectification on the basis of the Pakistan assessment order. The Appellate Tribunal, therefore, held that there could not be any charge of concealment of income or furnishing of inaccurate particulars thereof or fraud or gross or wilful neglect and, therefore, penalty under Section 271 (1) (c) does not lie. "

( 3 ) THE finding of facts recorded by the Tribunal, as would be evidenced from the facts stated hereinbefore, have not been challenged by any question raised or challenging the said findings either as perverse or being based on no evidence. In that view of the matter, we would answer the question by saying that the Tribunal was justified in holding that no penalty Under Section 271 (1) (c) could be imposed in the facts and circumstances of the case. In that view of the matter, it is not necessary for us to express any opinion on the interpretation of law relating to Section 271 (1) (c) of the I. T. Act, 1961, on which the Tribunal has based its findings. In this connection, we refer to the observations we have made in respect of question No. 1 in I. T. Ref, No. 320 of 1972 in the case of CIT v. Rupabani Theatres P. Ltd.

( 4 ) THE question is, therefore, answered in the affirmative and in favour of the assessee, in the manner indicated above. Each party will bear its own costs.