Penalty proceedings under Section 271(1)(c) of the Income Tax Act are independent and separate aspects of the proceedings, and the Tribunal is justified in appreciating the evidence independently and without being influenced by the earlier findings in the quantum appeal.

( 1 ) THIS petition under Section 256 (2) of the Income Tax Act, 1961 has been filed by the Revenue for a direction to the Income Tax Appellate Tribunal relevant to the assessment year 1993-84 to state a case and refer 842 to this Court for its opinion the following question stated to be question of law:- "whether, on the facts and in the circumstances of the case, the Hon ble ITAT is correct in law in cancelling penalty of Rs. 2,00,890. 00 imposed under Section 271 (l) (c) of the Act?"

( 2 ) THE assessee firm carried on business in Hing, Jeera, dry fruits etc. , in Delhi and Bombay. The assessee filed its return of income for the previous year relevant to the assessment year 1983-84 on 28. 9. 83 declaring total income at Rs. 71,850. 00. The Income Tax Officer completed the assessment of the assessee on 25. 3. 86 computing that total income of the assessee at Rs. ll,27,429. 00. In the appeal before CIT (Appeals) the said amount was reduced and the assessee was finally assessed at Rs. 3,90,205. 00 on the basis of the order passed by the Income Tax Appellate Tribunal.

( 3 ) THEREAFTER the Income Tax Officer initiated a proceeding against the assessee under Section 271 (l) (c) of the Income Tax Act for furnishing inaccurate particulars of income and on. conclusion of the proceedings ordered for levy of penalty of Rs. 2,00,890. 00 on the following items of concealed income, the addition of which were upheld by the Tribunal in the quantum appeal:- (a) Cost of 3000 kgs. of gum which was purchased outside the books of accounts: Rs. 50,000. 00 (b) Consignment of goods purchased for Rs. 88,115. 00 and sold for Rs. I lac and the sale proceeds not accounted for in the books: Rs. l,00,000. 00 (c) Un-explained cash deposits in Bombay Books: Rs. l,55,000. 00

( 4 ) AGAINST the aforesaid order of the Income Tax Officer levying penalty on him the assessee appealed to the Commissioner of Income Tax (Appeals) who dismissed the appeal. In the second appeal filed by the assessee before the Tribunal the appeal was allowed holding that there was no justification for treating the aforesaid additions as concealed income or income from undisclosed. sources. Mr. Pandey appearing for the Revenue, during the course of his arguments submitted that the Tribunal was not justified in giving a contradictory finding by ignoring its own findings in the quantum appeals in the same set of facts and accordingly a question of law does arise from the aforesaid findings of the Tribunals. In support of his submissions the learned Counsel for the Revenue relied upon the decision of the Rajasthan High Court in the case of Commissioner of Income Tax, Jodhpur v. Smt. Satnam Malik, reported in 120 ITR 309. Relying on the said decision the learned Counsel submitted that in the absence of new additional grounds there was no reason for the Tribunal to depart from its own findings given in the quantum appeal and therefore, the question sought to be raised in this application is a question of law and is liable to be REFERRED TO for opinion of this Court.

( 5 ) WE have considered the ratio of the aforesaid decision of the Rajasthan High Court and in our opinion the ratio of the said decision is not applicable to the facts and circumstances of the present case. We find that the Tribunal in the instant case has arrived at its own conclusion on facts after due and proper consideration of the entire material for and against the assessee and thereafter has 843 come to a definite finding that there was a complete stock tally and all the purchases made including the opening stock were fully accounted for in the sales and in the closing stock and also that the source for the credits in Bombay office was fully explained. In view of the fact that the Tribunal has considered the entire material for and against the assessee, in the instant case, the ratio of the said decision is not applicable to the facts of the present case.

( 6 ) AT this stage we may also appropriately refer to