( 1 ) TRIBUNAL has referred the following question under Section 256 (1) of the Income Tax Act, 1961, (hereinafter referred to as "the Act") for opinion of this Court relating to the assessment year 1989-90:

"whether on the facts and circumstances of the case, I. T. A. T. was justified in holding that conditions laid down in explanation 5 (2) to Section 271 (1) (c) were fulfilled and no penalty was leviable Under Section 271 (1) (c)?"

( 2 ) THE brief facts of the case are follows:

( 3 ) A search was conducted at the residential as well as business premises of the assess Opposite party (hereinafter referred to as "assessee") on 30. 08. 1988, during the course of which cash, jewellery and other valuable articles and things were found and seized. It appears that during the course of the assessment proceedings to settle the dispute on agreed basis assessee moved an application before CIT on which direction was issued by Commissioner of Income-tax, Kanpur, in which it was remarked that penalty proceedings under Section 271 (1) (c) of the Act may not be applicable where additional income is covered by Explanation 5 of Section 271 (1) (c) of the Act as the said income stood s