JUDGMENT

H. Swarup, J. - The Income Tax Appellate Tribunal has referred to us the following question of law :

"Whether, on the facts and in the circumstances of the case, the view taken by the Appellate Tribunal that no penalty is eligible is sound in law ?"

2. The assessee is a registered firm carrying on business in grain commission agency, speculation and business on its own account. It filed return of the income for 1958-59 showing an income of Rs. 30,095. The Income Tax Officer in the course of assessment proceedings found that the assessee had obtained overdrafts from the bank on the security of grains. On a comparison of the statement to the bank furnished by the assessee and the stock accounts, the Income Tax Officer found that the assessee had pledged goods to the banks which were in excess of the goods as per its stock account. The discrepancy was in various items of grain, viz., barley, gram, bijhara, arhar, wheat and mutter. The Income Tax Officer determined the value of the excessive stocks at Rs. 25,406. The assessee was called upon to explain the above discrepancy and he gave the explanation that the discrepancy was due to the wrong naming of the grains by the bank aut