Satish Chandra, C.J.

1. THIS reference raises an interesting question in respect of the levy of penalty.

2. THE assessee is a registered firm. It carries on business in shoes. For the assessment 1968-69, the assessee filed a return of income on 31st October, 1968, disclosing an income of Rs. 65,691. The ITO included Rs. 71,834.95 as income from other sources in respect of credit balance existing in the assessee's account books in respect of six other firms. This addition was reduced on appeal. On further appeal, the Tribunal upheld the inclusion in relation to two cash credit items, namely :--

(1) of Rs. 16,350 relating to Sri Ram Lal, leather merchant, Agra,

(2) of Rs. 8,510 of Chimanlal, leather merchant, Agra.

Thus, the inclusion as income from other sources was reduced from Rs. 71,834-95 to Rs. 24,860. The Tribunal also upheld the inclusion of Rs. 8,423 on account of bonus received by the assessee as a result of the devaluation of Indian currency. This receipt was held to be clearly revenue in nature and includible in the total income of the assessee.

3. MEANWHILE, the IAC initiated penalty proceedings, and ultimately levied a penalty of Rs. 57,000, because the amount of