Krishnamoorthy Iyer, J.
1. The question referred at the instance of the Commissioner of Income-tax, Kerala, Ernakulam, under Section 66(1) of the Indian Income-tax Act, 1922, is the following :
'Whether, on the facts and in the circumstances of the case, cancellation of the levy of the penalty under Section 28(1)(c) of the Indian Income-tax Act, 1922, was justified ?'
2. The reference relates to the assessment year 1958-59 corresponding to the accounting year ending with August 16, 1957, In the course of the examination of the accounts for the year ending August 16, 1957, the Income-tax Officer found the following cash credits :
Cash credit in favour of Shop No. 14 at Kayamkulam
TravancoreForward Bank Ltd.
Cashcredit in favour of Shop No. 1 at Kayamkulam
Cashcredit in favour of Shop No. 14 at Kayamkulam
3. In the order of assessment the Income-tax Officer after rejecting the explanation of the assessee treated the sums as undisclosed income.
4. There was an outbreak of fire in one of the shops of the assessee at Kayamkulam, and he received from the insurance company Rs. 1,05,000. He credited Rs. 87,611 in his trading account and the balance of Rs. 17,355 was credited in the name of the insurance company after deducting the bank commission. According to the Income-tax Officer the sum of Rs. 17,355 should have been treated as revenue receipt.
5. Penalty proceedings were, therefore, initiated against the assessee. The Income-tax Officer found that the assessee had concealed the income of Rs. 20,000 credited in the name of the Travancore Forward Bank Ltd. and that he had deliberately manipulated the account in making the two credit entries in the names of his two shops and that the omission to account for Rs. 17,355 was deliberate. He, therefore, held that Section 28(1)(c) of the Indian Income-tax Act, 1922, was attracted and levied a penalty of Rs. 30,000.
6. In the appeal filed by the assessee the Appellate Assistant Commissioner took the view that in respect of the cash credits amounting to Rs. 25,000, Section 28(1)(c) is attracted and regarding the sum of Rs. 17,355 he was of the view that it called for some leniency. He, therefore, reduced the penalty by Rs. 5,000.
7. In the second appeal the Tribunal found thus:
'It had not been established that the two sums represented the income of the assessee of the year and that they had been concealed. It is seen that one of the contentions of the assessee was that it had intangible additions in the past and the credits could be related to such additions. It had not been found that such additions would not have been available for such introduction. Moreover, the explanation itself is not altogether so impossible as to lead to the only conclusion that it represented the income of the year. The assessee had paid Rs. 43 62 by way of discounting charges for the cheque. Merely because this particular amount was not traceable in the total debit, the assessee's case cannot be thrown out at least in these proceedings. We are also not satisfied that there was any concealment in respect of the sum of Rs. 17,355.'
8. The view taken by the Tribunal is in accordance with the decision in Commissioner of Income-tax v. Gokuldas Harivullabhdas, : 34ITR98(Bom) , which has been approved by their Lordships of the Supreme Court in Commissioner of Income tax v. Anwar Ali, : 76ITR696(SC) . Section 28(1)(c) of the Indian Income-tax Act, 1922, reads:
'If the Income-tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person--.....
(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he or it may direct that such person shall pay by way of penalty, in the case referred to in Clause (a), in addition to the amount of the income-tax and super-tax, if any, payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in Clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income.'
9. It is clear from Commissioner of Income-tax v. Gokuldas Harivallabhdas, which has been approved by the Supreme Court in Commissioner of Incomer tax v. Anwar Ali, that proceedings under Section 28(1)(c) are penal in character and the burden is upon the department to prove beyond doubt that the amounts in question represent the assessee's income and that the assessee has concealed the particulars of such income or deliberately furnished inaccurate particulars of such income. The Tribunal decided the question in the light of the principles stated in these decisions. On a perusal of the evidence the Tribunal has come to the conclusion that the evidence is absolutely insufficient to prove that the amounts in question represent the income of the assessee. We do not find any reason to come to a different conclusion. In these circumstances, the view taken by the Tribunal that there is no case made out for the imposition of the penalty under Section 28(1)(c) of the Indian Income-tax Act, 1922, is right. We, therefore, answer the question in the affirmative, that is, in favour of the assessee and against the department.
10. A copy of this judgment will be forwarded to the Income-tax Appellate Tribunal, Cochin Bench, under the seal of this court and the signatureof the Registrar.