K.S. Jhaveri, J.

1. By way of this petition under Article 226 of the Constitution of India, the petitioner has challenged the order passed under section 264 of the Income-tax Act, 1961, on 25.2.2008 at Annexure-H to the petition by the Commissioner of Income-tax, Surat, whereby the revision preferred by the petitioner was dismissed.

2. The facts of the case are that the assessee filed return of income for assessment year 1996-97 on 12.8.1996 disclosing total income at Rs. 42,020/-. In the profit and loss account filed along with the return of income, the petitioner had shown labour charges to be paid at Rs. 15,19,030/-. The Assessing Officer made regular assessment under section 143(3) of the Act on 31.3.1997 determining total income at Rs. 10,86,800/-. While making assessment, the Assessing Officer accepted payment of Rs. 4,79,243/- made to five works who appeared before him and disallowed Rs. 10,39,787/-. Being aggrieved by the order of the Assessing Officer, the petitioner preferred appeal before the Commissioner of Income-tax (Appeals) who reduced the disallowance to Rs. 7,27,851/- vide his order dated 22.3.2002. Against the order of the Commissioner (Appeals), the petitioner carried the matter further before the Income-tax Appellate Tribunal. The Tribunal vide its order dated 21.12.2004 remanded the matter to the Assessing Officer. The Assessing Officer again added Rs. 10,39,787/- to the total income and ordered to issue penalty proceedings under section 271(1)(b) and 271(1)(c) of the Act. Thereafter, the Assessing Officer imposed penalty of Rs. 6,96,630/- by order dated 30.8.2006. However, since the petitioner could not file appeal, the petitioner preferred revision application under section 264 of the Act to the respondent wherein he has clearly mentioned that the penalty is not imposable in view of the decision of the Apex Court in the case of T. Ashok Pai v. Commissioner of Income-tax reported in 292 ITR 11 and requested to set aside the order of the Assessing Officer imposing penalty. However, to his utter surprise, the revision application was rejected by the respondent vide order dated 25.2.2008 by upholding the penalty order of the Assessing Officer by observing in paragraph No. 5 of the said order thus:

"From the above, it may be appreciated that the assessee was allowed repeated opportunities to produce the parties to whom the payments were made or any other evidences in this regard. However, there was no compliance on the part of the assessee and the Assessing Officer was constrained to pass ex-parte order under section 144 of the I.T. Act as the assessee did not comply with the notices issued by him from time to time. During the course of penalty proceedings also the repeated opportunities allowed to the assessee were not complied with and which establishes that the assessee has concealed his income by furnishing inaccurate particulars of his income."

3. Learned counsel for the petitioner Mr. Shah has contended has contended that if we look at the original order, it shows that there is neither concealment nor furnishing inaccurate particulars of income and therefore the penalty order is bad in law. He has relied on the decision of this court in the case of Navnitlal K. Zaveri v. Commissioner of Income-tax reported in 125 ITR 385, particularly at page 388, relevant portion which is reproduced below:

"It must be pointed out that time and again the Supreme Court and High Courts have pointed out that if the variation between the returned income and the assessed income arises by virtue of additions to the income made either because of disallowance or because of deemed income added or because of the estimate of the income made by the ITO, then penalty is not leviable."

3.1 He has further relied on the decision of the Delhi High Court in the case of Devsons Pvt. Ltd. v. Commissioner of Income-tax & others reported in (2010) 329 ITR 483 (Delhi) where in paragraph No. 27, it is observed as under:

"Another contention