Sambasiva Rao, Actg. C.J.
1. The revenue, having failed to persuade the Income-tax Appellate Tribunal to refer the following question of law to this court, has brought this income-tax case ;--
'Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in cancelling the penalty of Rs. 14,000 levied under Section 28(1)(c) of the Indian Income-tax Act, 1922 ?'
2. The Tribunal cancelled the penalty in the following circumstances: The assessee is a firm carrying on business in mica mining. For the assessment year 1957-58 it filed a return declaring an income of Rs. 8,249 from the mining section. The Income-tax Officer was not satisfied with this. He pointed out, during the course of the assessment proceedings, that he had information regarding various other internal and external transactions. The assessee after discussion with the Income-tax Officer agreed to the assessment on a total income of Rs. 60,000 from mica mining. But the matters did not stop there. The Income-tax Officer appears to have conducted some subsequent enquiries and thought, that even the assessment on the basis of Rs. 60,000 would not be correct. He, therefore, ultimately completed the assessment on an income of Rs. 1,00,000. Not resting content with that, he initiated penalty proceedings under Section 28(1)(c) of the 1922 Act on the ground that the income had been concealed. In appeal, the Appellate Assistant Commissioner reduced the total income to Rs. 60,000. The department's appeal to the Appellate Tribunal was unsuccessful. The Income-tax Officer levied penalty of Rs. 14,000. It was set aside by the Appellate Assistant Commissioner. The Appellate Tribunal confirmed this order of the Appellate Assistant Commissioner. While doing so, the Tribunal pointed out that the agreement on the part of the assessee to be assessed on a total income of Rs. 60,000, despite his return for a lower amount, is not conclusive for the purpose of penalty proceedings. According to the assessee, this addition was agreed to purchase peace with the department, as it was unable to adduce satisfactory evidence in support of its explanation. The firm did not admit either the alleged bogus purchases or the exports by others as referable to its own production. In the subsequent year also, the Income-tax Officer made a similar addition based on the same evidence. But the Tribunal sustained an addition of only Rs. 35,000 in respect of the second year. The Tribunal, therefore, thought that the probabilities of the case speak both for and against the assessee, and it is not as if the evidence relied on by the department and the entirety of the circumstances reasonably point to the conclusion that the amount added in the assessment represented the assessee's income and that the assessee had consciously concealed the same or had deliberately furnished inaccurate particulars thereof. In the circumstances, following Anwar Ali's case : 76ITR696(SC) the Tribunal held that the department had not made out a case for the imposition of penalty of the assessee under Section 28(1)(c) of the Act.
3. Before us, learned standing counsel for the revenue strongly relies on the circumstance that the assessee had agreed to the assessment on the total income of Rs. 60,000 despite his return for a much lower amount. On a consideration of the totality of the circumstances, the Tribunal was of the opinion that it would not necessarily follow that there was concealment of the income by the assessee or that it had deliberately furnished inadequate particulars thereof. The possibility of the assessee agreeing to a higher assessment for purchasing peace could not be altogether ruled out. In these circumstances, the Tribunal felt that the department has not discharged its onus of proving that there was deliberate concealment or deliberate furnishing of inaccurate particulars.
4. Learned counsel for the revenue relies on the decision of the Delhi High Court in Durga Timber Works v. Commissioner of Income-tax : 79ITR63(Delhi) . It is clearly a case where the assessee admitted that two amounts could be treated as its concealed income. It was on this clear admission of concealment the Delhi High Court held that there was no further burden on the department to adduce evidence to establish deliberate concealment. The next decision relied on by the learned counsel is Mahavir Metal Works v. Commissioner of Income-tax where the Punjab High Court dealt with a case in which the assessee had filed a revised return in the course of the assessment proceedings and owned the amount in question as his income. It was also established that he had earlier filed a return concealing the said income by deliberately furnishing inadequate particulars of that income. That admission was proved by the department. In such a situation, the Punjab High Court held that the burden would shift to the assessee to establish that the admission made by him was wrongly or illegally made or was incorrect. Lastly, reliance is placed on the decision of the Allahabad High Court in Commissioner of Income-tax v. Sir Shadilal Sugar & General Mills Ltd. : 86ITR776(All) . There also there was an admission by the assessee that there were false claims of payment to contractors and that those items represented its income. These are clear cases of admission of concealment by the assessees and they do not help the revenue in this case because there is no such admission here. As we have pointed out, the only circumstance that is pressed against the assessee is that it had admitted for a higher assessment than its returned income. It is not, therefore, possible to say that the burden placed on the revenue in penalty proceedings to establish deliberate concealment has been completely discharged.
5. That is what the Tribunal has decided and we see no reason in the circumstances of the case to reject the same. In the result, the income-tax case is dismissed but, having regard to the circumstances, we direct the parties to bear their own costs.