Sabyasachi Mukhakji, J.
1. In this reference under Section 256(2) of the I.T. Act, 1961, the following questions have been referred to this court:
'(1) Whether, on the facts and in the circumstances of the case, there was any evidence before the Tribunal to support its finding that there was clear concealment of income of Rs. 1,45,000 and Rs. 1,24,881 to attract the provisions of section 271(1)(c) ?
(2) Whether, on the facts and in the circumstances of the case, and the amount of Rs. 1,24,881 having been declared by the assessee in Part F of the return, was the Tribunal right in law in holding that the provisions of section 271(1)(c) were attracted in respect thereof?'
2. It appears that this reference relates to the assessment for the assessment year 1962-63. For this year the assessee filed a return on June 26, 1964, declaring a total income of Rs. 15,235. In Part F of the return the assessee showed a sum of Rs. 1,24,881 as receipt exempt from tax under Section 10(3) of the I.T. Act, 1961, being winnings from betting on horse races. The said winnings were stated to have been received through K. N. Chakraborty, proprietor of M/s. Taraknath & Co., a concern of book-makers of the turf club. In the course of the assessment proceedings the ITO noticed credits aggregating to Rs. 1,45,000 in five ledger accounts of the relevant previous year. In those ledger accounts the credits appeared as loans taken from hundi creditors. By a letter dated 14th March, 1967, the ITO informed the assessee that no evidence had been produced in support of the genuineness of the cash credits and called upon him to show cause why they should not be treated as the assessee's income from undisclosed sources. In his reply dated March 17, 1967, the advocate of the assessee referred the ITO to the assessee's disclosure petition filed before the Commissioner of Income-tax, wherein it was admitted that the said credits represented the assessee's own undisclosed earnings during the assessment years 1950 to 1959 which he had subsequently introduced under the assumed names either in his own accounts or in those of one Majula Pvt. Ltd. of which concern he was a director. By that reply the ITO was requested to keep the assessment pending till the disposal of the disclosure petition by the Commissioner. The ITO, however, completed the assessment on 28th March, 1967, adding the sum of Rs. 1,45,000, the aggregate of the cash credits under the head 'Other sources', since the assessee failed to discharge the onus of proving the source of the cash credits. By a letter dated 15th March, 1967, the ITO informed the assessee that the book-maker was summoned under Section 131 of the Act to produce his books of account and other relevant evidence in support of the payment of the horse race winnings of the assessee. Then the assessee was asked to appear to prove the same. But the assessee was unable to prove because theentries in the book-maker's account had not tallied with that of the assessee. In that context the ITO observed : 'I hold that Rs. 1,24,881 is the income from undisclosed source and winning on horse betting is only a created one only to rise up to the occasion to explain away the real source of income.'
3. After completion of the assessment the ITO initiated penal proceedings against the assessee under Section 271(1)(c) and referred the matter to the IAC for further action. Before the IAC it was contended that the asses-see's appeal disputing the above-mentioned addition in the assessment was pending and till the disposal of appeal the question of imposing penalty did not arise. The IAC overruled the objection and for the reasons mentioned in his order dated 25th March, 1963, held that the assessee was guilty of concealment of the aforesaid three items of income added in the assessment. In his order the IAC has observed as follows ;
'Regarding the winnings claimed to be from betting on horse racing it is claimed that all the moneys were received by cheque and the bookmaker also was produced before the ITO and hence this income was proved; for reasons given in detail in the assessment order it has to be held that the assessee's winning on betting on horse racing is not genuine and that this was only a got up story. In the circumstances of the case, the addition made by the ITO as income of the assessee from undisclosed sources has to be held as concealed income attracting the provisions of section 271(1)(c).'
4. The matter thereafter went up in appeal before the Tribunal and so far as the additions of Rs. 1,45,000 and Rs. 1,24,881 are concerned, the Tribunal observed as follows after discussing the relevant evidence :
'The assessee has not placed any evidence to prove the same. In fact we have held in the quantum appeal that the assessee has not placed any evidence to prove the genuineness of the loans amounting to Rs. 1,45,000 representing loans and also the sum of Rs. 1,24,881 claimed as receipts from winnings on horse races. We have further held that the assessee has brought in his own unaccounted money from undisclosed sources into the books of account. Thus, there was clear concealment of income to attract the provisions of section 271(1)(c).'
5. It appears, therefore, that so far as the assessee's explanation that Rs. 1,24,881 was not included in the total income as receipts from the winning on horse races is concerned, it was rejected. The assessee could not prove that there was any winning at all from the horse races. On the other hand from the totality of the evidence it appears that the said story of horse racing was created to explain the receipts of Rs. 1,24,881. There is no dispute that the returned income was less than 80% of the income assessed. Hence, the Explanation to Section 271(1)(c) was clearly attracted tothe facts of this case. The onus was on the assessee to prove that such concealment in furnishing inaccurate particulars of the income was not due to any fraud or gross or wilful neglect on his part. Unless the assessee proves that such concealment or failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part he shall be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. Now, in this case, the Explanation is attracted if we accept the assessment of quantum appeal. It was contended, however, on behalf of the assessee that the imposition of penalty being as a result of a criminal proceeding where the assessee had indicated in Schedule F his income and the quantum has already been properly stated but claimed exemption on certain grounds which the assessee was unable to sustain or prove that it could not be said that he had concealed the particulars of income or furnished any inaccurate particulars of his income. It is well settled by several decisions that even after coming into operation of the Explanation the principles laid down in the case of Anwar Ali, namely, the decision of the Supreme Court in the case of CIT v. Anwar Ali : 76ITR696(SC) , would be applicable. Therefore, the mental element has to be proved with the Explanation introduced that the onus is on the assessee to prove the mental element in the negative form. We have recently taken a decision in the case of CIT v. Rupabani Theatres P. Ltd. in I.T. Ref. No. 320 of 1973, the judgment in which was delivered on 18th September, 1980 : 130ITR747(Cal) , reiterating the same principles. It has also been held that the evidence in assessment proceeding are not conclusive but they are good evidence which cannot completely be ignored. But in this case the totality of the evidence is that the assessee's certain incomes were not included in the return. It appears that he had claimed that this income was the winnings from betting on horse racing but he was unable to prove that. It was further held that the story of horse racing was set up as a device to explain the source of money. In that background the onus was entirely on the assessee because of the explanation to prove by evidence that failure to return the correct income or the concealment of the correct income or the particulars thereof were not due to any fraud or gross or wilful neglect on the part of the assessee. It was urged that when the assessee had indicated the particulars of the income then it cannot be said that the assessee had concealed the particulars of the income or furnished inaccurate particulars. The assessee might not have, on the question of horse racing, been guilty of concealment of the income but would certainly be guilty of furnishing inaccurate particulars of such income. The particulars of the income were furnished as winning on horse racing when there is no winning on horse racing at all. This expression, namely, particulars of such income is wide enough, in ouropinion, to cover a case where a false explanation was given to explain the source of income. It is not a case where the assessee stated the facts correctly, but the claim of exemption is on certain legal basis which is not accepted; but it is a case where the assessee gave an incorrect or false particulars of facts and thereby furnished inaccurate particulars of income. In such a case, in our opinion, the principles of the said section would be attracted even under the head of winning on horse racing and the decision will come within the ratio of the decision of the Supreme Court in the case of D. M. Manasvi v. CIT : 86ITR557(SC) . In this connection reference may also be made to the observations of the Supreme Court in the case of Mansukhlal and Brothers v. CIT : 73ITR546(SC) . So far as the hundi loans are concerned it has been held in respect of the quantum appeal in the judgment delivered by us that the additions were correctly upheld by the Tribunal on materials before the Tribunal. On the disclosure petition we have observed that the Commissioner was to find out whether such disclosure petition remained undisposed of in the quantum appeal and if such disclosure petition still remained undisposed of, then the Commissioner should dispose of the petition in accordance with law and as quickly.as possible. If as a result of such disposal, relief is obtained, such relief is to be given to the assessee. If such disclosure petition is accepted, we have directed the Commissioner to take steps to give relief to the assessee as he is entitled to. Having regard to the facts and circumstances we, therefore, answer question No. 2 in the affirmative and in favour of the Revenue. So far as question No. 1 is concerned we also answer it in the affirmative and in favour of the Revenue, with this direction that in case relief is granted to the assessee in the disclosure petition in respect of income of Rs. 1,45,000 from the undisclosed source then in the quantum appeal appropriate relief might be given to tht assessee. With these directions the questions are answered in the manner indicated above.
6. Each party will pay and bear its own costs.
Sudhindra Mohan Guha, J.
7. I agree.