The assessee is entitled to rebut the presumption of concealment of income raised under the explanation to section 271 (1) of the Income-tax Act, 1961 by showing that his failure to return correct income was not due to any fraud or gross or wilful neglect.

( 1 ) AT the instance of the Revenue, the following question has been REFERRED TO to this court by the Income-tax appellate Tribunal, Delhi Bench c , for opinion:

"whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the order of penalty passed by the Inspecting Assistant Commissioner of Income-tax imposing a penalty of Rs. 12,000. 00 under section 271 (l) (c) read with section 274 ot the Income-tax Act 1961?"messrs. Narang and Company, a registered firm carrying on business in brass-ware goods and in exports and imports, is the assessee. The relevant assessment year is 1961-62, the previous year being the financial year ending on March 31. 1961. The Income-tax Officer found the following cash credits in sundry creditors account:the assessee explained that advances aggregating Rs. 20,000. 00 had been given to these parties in the sundry advances account, which on being received back during the relevant previous year were credited in the account. As this explanation was not considered proper and no further explanation could be rendered, the assessee surrendered these amounts voluntarily to be taxed as its income. The asessee wrote to the Income-tax Officer on January 20, 1961 in the following terms

"we are unable to render proper explanation of the credits in the under-noted accounts, which you may treat as part of the taxable income:

THE above additions are being voluntarily made and we trust you would be kind enough not to levy any penalties in this respect. "

( 2 ) THE Income-tax Officer also found an item in the foreign sales account in respect of a bill of Rs. 14,115, which was reversed in the books. The assessee explained that the bill was not retired by Mess"s V. S. Savona, Los Angles, to whom the goods had been despatched. The goods remained with the clearing agents throughout the previous year. As the sale did not relate to the year in question, entry in respect thereof was reversed. The goods, however, had not been included in the closing stock during the year. This, according to the assessee, happened inadvertently. It had no objection to the closing stock being increased by Rs. 5,615. 00, which was the approximate cost of goods. The Income-tax Officer added these amounts as income of the assessee. He issued a penalty notice under section 274 read with section 271 (l) (c) of the Income-tax Act, 1961 and as the minimum amount of penalty imposable exceeded Rs. 1000. 00, REFERRED TO the matter to the Inspecting Assistant Commissioner of Income-tax. who imposed upon the assessee a penalty of Rs. 12,000. 00. The asses- see appealed to the Income-tax Appellate Tribunal and contended that it had not concealed any income, nor had furnished inaccurate parti-, culars. It could not furnish in the year 1965, further explanation after a lapse of five years. The amount of Rs. 20,000. 00 according to the assessee was surrendered not because it was concealed income, but because the assessee was unable to render proper explanation after this lapse of time. Relevant entries in the cash book were, however, produced to show that during the relevant year, it had made actual payments to the parties concerned. Regarding Rs. 5650. 00 the assessee pointed out that the goods had not been received back even till now. The Tribunal accepted the contentions of the assessee and cancelled the penalty.

( 3 ) MR. B. N. Kirpal, the learned counsel for the Revenue contended before us that the onus lay on the assessee to prove that there was no fraud or wilful neglect on his part. According to him, the Tribunal was under an erroneous impression that the burden of proving the essential ingredients for imposing penalty was on the Revenue. He mainlv relied on a judgment of this court in Durga Timber Works v. Commissioner of Income-tax, (1971) 79 ITR 63 (1 ).

MR. K. S. Suri, on the other hand, contended that the explanation offered by the assessee was found by the Tribunal to be acceptab