Satish Chandra, C.J.

1. For the year 1970-71, the Tribunal has referred the following question of law for our opinion :

"Whether, on the facts and in the circumstances of the case, was there any material in support of the finding that penalty was not leviable under Section 271(1)(c) of the Income-tax Act, 1961, in support of the concealed item of income of Rs. 23,500 ?"

2. For the assessment year 1970-71, the assessee which was a partnership firm, returned an income of Rs. 17,480. The ITO did not accept the return and made some additions. The assessee went up in appeal, but failed. The assessee then went up to the Tribunal. Ultimately, the additions of Rs. 23,500 on account of unexplained retirement of certain hundis was upheld by the Tribunal. Other additions were deleted by the Tribunal. During these proceedings, the ITO referred the case to the IAC for drawing up penalty proceedings. The IAC issued the requisite notice and after hearing the assessee imposed a penalty of Rs. 25,840 on the footing that that much amount represented the concealed income. He held that the charge of concealment of income has been proved to the hilt against the assessee. The assessee went up in