K. A. THANIKKACHALAM J.

Pursuant to the direction of this court on October 27, 1981, in TCP. No. 143 of 1981, the Tribunal referred the following two questions for the opinion of this court:

"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding and had valid materials to hold that no penalty under section 271(1)(c) could be levied in the assessee's case on the ground that there was no material to show that the assessee had offered the credits of Rs. 15, 000 for assessment as his undisclosed income ?

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in not considering and pronouncing upon the grounds Nos. 4 and 5 raised in the grounds of appeal filed by the Department?"

The assessee filed his return for the assessment year 1973-74 admitting loss of Rs. 41, 689. The Income-tax Officer noticed that there were two cash credits totalling Rs. 15, 000 during the financial year ended on March 31, 1973. The Income-tax Officer enquired regarding the source, but the assessee agreed to the addition of the above sum as income from undisclosed sources. The Income-tax Officer also ini