B. P. JEEVAN REDDY, CJ.

( 1 ) UNDER Section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the tribunal has referred the following two questions :

" (1) Whether, on the material on record, the Income-tax Appellate Tribunal could legally come to the conclusion that the assessee had discharged the burden which lay upon him in terms of the explanation to Section 271 (1) (c) of the Income-tax Act ? (2) Whether, on the facts and under the circumstances of the case, the Income-tax Appellate tribunal was legally correct in cancelling the penalty of Rs. 20,000 imposed by the Inspecting assistant Commissioner under Section 271 (1) (c) of the Income-tax Act ?"

( 2 ) THE assessee is an individual. He was a partner in Messrs. Hindustan Automobiles. Kanpur. He derived income both from the firm as well as certain interest income. He filed a return showing an income of Rs. 11,787 for the assessment year 1968-69. The Income-tax Officer completed the assessment on a total income of Rs. 1,29,838. He added Rs. 30,000 as income from undisclosed sources which included a deposit of Rs. 20,000 in the name of Shri Dilbagh mehra. Having completed the assessment, the Income-tax Of

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