V. Ramaswami, J.
1. At the instance of the revenue, the following question has been referred:
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in cancelling the penalty of Rs. 72,220 levied under Section 271(1)(c) of the Act ?'
2. For the assessment year 1964-65, for which the previous year ended on July 1, 1963, the assessee returned an income of Rs. 2,01,000. The assessee's business was banking and money-lending. He later filed a revised return showing an income of Rs. 2,45,000. The ITO made the assessment on a total sum of Rs. 2,73,566 and initiated penalty proceedings for concealment of the income. The total income included a sum of Rs. 72,220. It would appear that as per the Finance Act, 1965, the assessee made a voluntary disclosure of Rs. 3,85,000. But the ITO found another sum of Rs. 2,15,000 as having been advanced to parties outside the account. From this total of Rs. 6,00,000, the ITO, while making assessment orders for the assessment years 1962-63 and 1963-64, made a deduction of Rs, 5,27,780. The balance amounted to Rs. 72,220 and that amount the ITO considered as referable to the assessment year 1964-65, and included the same in the assessment order. The IAC, who initiated penalty proceedings, ultimately levied a penalty of an equal amount of Rs. 72,220, On appeal, the Tribunal found that what was brought to tax, namely, Rs. 2,15,000, together with the outstanding as on July 1, 1963, to the extent of Rs. 3,85,000 disclosed under the Finance Act of 1965, cannot be referred to the earnings of any particular year. There being no evidence to show that this sum of Rs. 72,220 added by the ITO could be related to the assessment year 1964-65, it held that no penalty was leviable. It is against this order the above question has been referred.
3. We have repeatedly held that in penalty proceedings independent evidence is necessary to show the concealment. The Tribunal had pointed out that there is no evidence to show any concealment of any amount in this particular year. Concealment involves existence of an income and the existence of the income has to be established by some positive evidence. It is only on the basis of some best judgment assessment the ITO has included the sum of Rs. 72,200. But that by itself will not supply evidence of concealment. In those circumstances, we are unable to see-any error of law in the order of the Tribunal. Accordingly, we answer the referencein the affirmative and against the revenue. The assessee will be entitled to its costs. Counsel's fee Rs. 250.