THANIKKACHALAM J.

In compliance with the directions of this court in T. C. P. No. 224 of 1979, the Tribunal referred the following question for the opinion of this court under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act").

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the assessee had not furnished inaccurate particulars of the income in the original return filed on March 17, 1972, and accordingly in deleting the penalty of Rs. 10, 000 imposed under section 271(1)(c) of the Act ?"

The assessee is a registered-firm doing business in jaggery at Vellore. On March 17, 1972, for the assessment year 1971-72, the assessee filed a return, disclosing the business income of Rs. 64, 234. In the course of examination of the accounts, the Income-tax Officer found that there was a credit for Rs. 10, 000 in the name of one Sri Gopal Mudaliar. The assessee filed a confirmatory letter from Gopal Mudaliar in support of the loan of Rs. 10, 000 taken from him. In the course of the enquiries made by the Income-tax Inspector, Gopal Mudaliar denied having advanced any loan to the assessee. The