Sabyasachi Mukharji, J.
1. In this reference under Section 256(1) of the I.T. Act, 1961, we are concerned with two assessment years, namely, the assessment years 1957-58 and 1961-62 for which the corresponding accounting periods were 2012-13 and 2016-17, Dewali years, respectively. The assessee is a registered firm with four partners who are all brothers having equal shares. The original assessment for the year 1957-58 was completed on 28th October, 1957. At the time of assessment, the assessee had shown certain cash credits in the name of different hundiwallas, as they have come to be known in income-tax jargon in this country. The ITO accepted the credits as genuine while making the original assessment for the year 1957-58. On the 3rd of February, 1966, the assessee filed a disclosure petition. In the said disclosure petition, the assessee had stated, inter alia, as follows :
'That your petitioner-firm and its partners as already said have earned these incomes during the period 1949 to 1955 but no accounts or documentary evidence in support of the earning and the amount thereof year-wise is available or can be produced.
That your petitioner-firm and its partners humbly submit that your goodself may be pleased to spread over and distribute equally the peak credit amounting to Rs. 4,31,972 for a period of eight years commencing from 2009 Dewali corresponding to I.T. assessment year 1953-54 to 2016 Dewali corresponding to I.T. assessment year 1960-61 and direct the ITO to complete the assessments accordingly by adding each year's amount to the total income previously assessed of your petitioner firm and its partners.'
2. The assessee had also prior to these averments stated as follows :
' That your petitioner firm started introducing cash in the shape of loan in the names of different hundiwallas in the books of account from 2013 Dewali year corresponding to the I.T. assessment year 1957-58. The said procedure of introduction of cash in the shape of loan in the names of different hundiwallas in the books of account of your petitioner-firm has continued up to 2022 Dewali corresponding to the I.T. assessment year 1966-67.
That prior to 2013 Dewali, your petitioner-firm and its partners had unaccounted cash in hand exceeding Rs. 3,00,000 earned by it during the period 1949 to 1955 when due to the Second World War the price of scrap iron and hardware materials went up very high. All these profits were kept outside the books of account as cash in hand and were subsequently introduced in the books of account in the shape of hundi loans in the names of different individuals. A detailed list of such hundi loan transactions is under preparation and your petitioner undertakes to file the same within a fortnight's time.'
3. In the statement of case, however, it was mentioned that subsequent to the making of the original assessment the ITO had reason to believe that due to the omission or failure on the part of the assessee to disclose fully or truly the particulars of his income the amount representing the cash credit had escaped assessment. It was stated, further, accordingly, that he had reopened the said assessment under Section 147(a) of the I.T. Act, 1961. But it appears that the notice under Section 148 of the I.T. Act, 1961, on the basis of Section 147(a) of the I.T. Act, 1961, was issued on 15th March, 1966, that is to say, subsequent to the filing of the disclosure petition. No return was filed pursuant to the notice issued after the return for the assessment in question, namely, assessment year 1957-58, and after the notice under Section 148 of the I.T. Act, 1961. The assessee also did not produce the books of account and other evidence in response to the notice under Section 142(1) of the I.T. Act, 1961. The ITO, thereupon, completed the assessment for the year 1957-58 under Section 144 read with Section 147(a) of the I.T. Act, 1961, ex parte on the basis of the materials included in the petition. He found cash credits to the tune of Rs. 1,80,000 in the accounts of six parties on different dates. No attempt had been made to prove the loans. The assessee's case was as mentioned in the disclosure petition that the amounts represented the earnings of the firm for the prior years and the procedure for introduction of the cash in the shape of loans in the names of different hundiwallas in the books of account of the petitioner was started in the assessment year 1957-58 and continued up to the assessment year 1966-67. These were according to the assessee income earned during the period 1949 to 1955, According to the assessee these incomes were earned during the period 1949 to 1955 when due to the Second World War the price of scrap iron and hardware materials went up very high and these profits were kept outside the books of account as cash in hand and were subsequently introduced in the books of account in the shape of hundi loan in the names of different individuals. The ITO, therefore, treated the cash credit amounting to Rs. 1,80,000 as assessee's income from undisclosed sources. He also disallowed a sum of Rs. 4,154 as alleged interest paid to different hundiwallas because these were interests on those fictitious hundiloans. The ITO before completion of the assessment initiated proceedings under Section 271(1)(c) of the I.T. Act, 1961.
4. For the assessment year 1961-62, the assessee filed its return showing an income of Rs. 21,144 under the head 'Business '. While examining the books of account of the assessee the ITO found fresh cash credits to the tune of Rs. 1,92,500 in the names of 8 (eight) parties on different dates. It is recorded in the statement of the case that the advocate of the assessee admitted that these credits were not genuine but represented the unaccounted cash which was introduced in the accounts in the form of hundi loans. In the circumstances, the ITO added the credit of Rs. 1,92,500 as the assessee's income from other sources. He also disallowed the claim of interest of Rs. 34,130 on these alleged hundi loans as not being genuine. The ITO in this case also initiated penalty proceedings under Section 271(1)(c) of the I.T. Act, 1961, before completion of the assessment.
5. The ITO referred the penalty proceedings for the assessment years under Section 274(2) to the IAC. The IAC issued notices to the assessee for both these years to show cause why penalty should not be imposed under Section 271(1)(c) read with Section 274(2) of the I.T. Act, 1961. In response to the notices, the assessee's advocate appeared and made his submissions. It was submitted on behalf of the assessee that the disclosure petition had been filed by the assessee before the Commissioner wherein the assessee had accepted those credits as representing its concealed income. The IAC held that the concealment had been clearly proved, particularly, on the assessee's own admission in the disclosure petition under Section 271(4A) admitting that the sum of Rs. 1,80,000 was concealed income in the first year. He also found that prior to this admission according to the statement of case the ITO had made enquiries and found that the persons in whose names the credits were introduced were only name-lenders. Thus, he was of the view that on the basis of the evidence it was clearly established that the concealment had been made for the purpose of avoiding the assessee's liability to income-tax. The IAC held that the provisions of Section 271(1)(c) were clearly attracted and he held that the proceedings having been started under Section 147(a) on the 15th March, 1966, the Explanation to Section 271(1)(c) was also applicable. But the assessee did nothing to discharge the onus that lay on it under the Explanation to Section 271(1)(c). Further, according to the IAC, on independent evidence and also on the evidence given by the assessee, the assessee's concealment had been proved. He, therefore, imposed a penalty of Rs. 1,59,000 under Section 271(1)(c) for the assessment year 1957-58. For the assessment year 1961-62 the ITO similarly initiated penalty proceedings and referred the matter to the IAC and notices were issued for this year. The IAC held that no evidence has beenproduced to substantiate the contention of the assessee and he imposed a penalty of Rs. 90,000 for the assessment year 1961-62.
6. Against the above orders of the IAC, the assessee preferred appeals before the Tribunal. In the quantum appeal for the assessment year 1957-58, the Tribunal reduced the addition by Rs. 55,000 out of Rs. 1,80,000 added to the credit to be found prior to the financial year relevant to that assessment year and the balance of Rs. 1,25,000 was sustained. Since the assessee accepted the additions made in the assessment year 1961-62, there was no assessment appeal to the Tribunal.
7. So far as the appeals for the penalty proceedings were concerned, the Tribunal noticed that the additions in the cash credits were held to be bogus and disallowance of interest on the bogus loans formed the basis in both the years for the initiation of the penalty proceedings and the levy of penalty. It was urged on behalf of the assessee that the addition made in the assessment year 1957-58 was not on account of any detection made by the department with regard to the credits but only on the basis of the admission made by the assessee in its disclosure petition made on 3rd February, 1966. In respect of the assessment year 1961-62, it was submitted before the Tribunal that the ITO had started penalty proceedings long after the filing of the disclosure petition on the 3rd of February, 1966, and thus even before the notice under Section 143(2) was issued, the assessee had disclosed the entire income in the disclosure petition which was added by the ITO. Hence, it was contended that there was no fraud or concealment to attract the penal provisions of Section 271(1)(c) of the I.T. Act, 1961. The Appellate Tribunal accepted the assessee's contention. It was held that the penal provisions of Section 271(1)(c) were to be invoked to punish the contumacious conduct for wilful fraud or deliberate and utter disregard of the law. Though in the original return for the assessment year 1957-58 these amounts representing cash credits had been concealed the fact remained that at least in respect of the assessment year 1961-62 the assessee had made 'a clean breast in disclosing these amounts even before the department started the assessment proceedings and detected the concealment. In respect of the assessment year 1957-58 according to the Tribunal the original assessment had been completed on the basis of the false return then filed by the assessee. In that year also on the basis of the disclosure petition made by the assessee on 3rd of February, 1966, a copy of which was furnished to the ITO, reassessment proceedings were initiated and the amounts which the assessee admitted in its disclosure petition as bogus loan were brought to tax. The Tribunal referred to the decision of the Supreme Court of India in the case of Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) and considered whether the circumstancesof the case would warrant the application of the penal provisions. The Tribunal observed, inter alia, as follows :
'We are inclined to accept the assessee's contention. The penal provisions of Section 271(1)(c) are to be invoked to punish conduct of wilful fraud or deliberate and utter disregard of the law. Though in the original returns these amounts had been concealed, the fact remains that at least in respect of the last of the four years on hand the assessee had made a clean breast and disclosed these amounts even before the department started the assessment proceedings or detected the concealments. In respect of 1957-58 no doubt the original assessment had been completed on the basis of the false return then filed by the assessee. But here too it was on the basis of the disclosure made by the assessee on February 3, 1966, a copy of which was furnished to the ITO, that the latter initiated reassessment proceedings and brought to tax the amounts which the assessee admitted in his disclosure to be bogus loans. As pointed out by the Supreme Court in Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) , it is not as if penalty should be imposed simply because the law provides for it and it will be lawful to make the imposition. The question to be decided in such cases is whether the circumstances of the case would warrant the application of the penal provision. If in a case of this nature this provision is invoked that would only be discouraging the assessee to come out with truth before the falsity in their return is detected. In this view that we take, we hold that in none of these cases the application of the provisions of Section 271(1)(c) was warranted or called for. We hence cancel the penalties imposed in all these cases.'
8. Upon this, the following question has been referred to this court under Section 256(1) of the I.T. Act, 1961 :
'Whether, on the facts and in the circumstances of the case and having regard, particularly, to the admission of the assessee in the disclosure petition that the unexplained cash credits represented its own income, which it failed to disclose in the returns and to the fact that the assessee had claimed interest in respect of such cash credits in its returns, the Tribunal was justified in law in cancelling the orders of penalties made under Section 271(1)(c) of the Income-tax Act, 1961, for the assessment years 1957-58 and 1961-62?'
9. Before us the learned advocate for the revenue accepted the position that the Explanation to Section 271(1)(c) would not be attracted in view of the issues involved in this reference. Therefore, we are not concerned in examining this aspect of the matter. The question is whether in this case having regard to the facts which we have set out and which have been discussed in the order of the Tribunal and in the statement of case penalty was leviable. On this aspect the learned advocate for the revenue firstdrew our attention to Sub-section (4A) of Section 271 of the I.T. Act, 1961, Sub-clauses (i) and (ii) as these stood at the relevant time in aid of his submission that in the case of an assessee who had filed an application of disclosure under Sub-section (4A) of Section 271 of the I.T. Act, 1961, Clause (c) indicated that where the assessee himself had admitted the position that there had been a deliberate failure or omission to disclose fully or truly all material facts, penalty was leviable because only in a case where penalty was leviable he could ask the Commissioner to reduce or waive the minimum penalty imposable on a person. If the assessee's contention or stand was that there was no deliberate failure to disclose fully or truly and there was no offence committed under Section 271(1)(c) of the I.T. Act, 1961, which attracted the penal provisions, there was no scope for making an application to the Commissioner praying for reduction or waiver of the amount of penalty imposable. Therefore, according to the learned advocate for the revenue the very fact that the assessee had filed a petition under sub- Section (4A) of Section 271 of the I.T. Act, 1961, established the position that penalty was leviable and the ingredients for the levy of the penalty had been complied with. It was further urged that the assessee had not taken benefit of the scheme of filing disclosure petition under the Finance Act, 1965 or under the Finance Act II of 1965 (Finance (No. 2) Act, 1965) because in either of those cases the returned income would have been taxed at a flat rate of 60% in one case or, under the second Act, though the petitioner was a registered firm it would have been treated as an unregistered firm. Therefore, the assessee would have been in a worse position. In order to avoid this liability to pay additional taxes either on the basis that it was an unregistered firm or being made liable to pay taxes on the basis of 60% (tax rate) the assessee had availed itself of the provisions of Sub-section (4A) of Section 271 of the I.T. Act, 1961, which pre-supposed or proceeded on the basis that there had been acts committed by the assessee which attracted the penal provisions and which made the penalty imposable on the assessee. In those circumstances, it was submitted that the conditions required for levy of penalty had been proved in this case. It was submitted that while the Tribunal took into consideration the factum of the disclosure petition it did not take into consideration the full implication of the disclosure petition under Sub-section (4A) of Section 271 of the I.T. Act, 1961, as it stood at the relevant time. Secondly, it was urged that though in the case of penalty the onus lay on the revenue to prove the ingredients necessary for the imposition of penalty the nature of the conduct of the assessee as disclosed in the filing of the subsequent disclosure petition would be a relevant factor. In this connection our attention was drawn to the case of Durga Timber Works v. CIT : 79ITR63(Delhi) , where the Division Bench of the Delhi High Court held that the direction given by the ITO in thecourse of his assessment order that the penalty notice should be issued to the assessee for concealment of particulars of income amounted to the commencement of the penalty proceedings. Thereafter, the assessee, a registered firm, had filed its return for the assessment year 1960-61 declaring an income of Rs. 12,225, In the course of the assessment proceedings, the ITO noticed cash credits to the tune of Rs. 17,500 in certain amounts and the accounts were shown as squared up. Likewise, a sum of Rs. 36,900 was shown in the assessee's books as having been invested in a supposed factory out of which a'sum of Rs. 22,800 was shown as adjusted, but for the balance of Rs. 14,100 no explanation had been given. When the assessee was asked to adduce evidence to establish these cash credits and to explain the source of investment of Rs. 14,100 it was admitted that the two amounts could be treated as its concealed income and be included in its total income for that year. In the assessment order dated 20th March, 1965, the ITO directed the issue of a penalty notice to the assessee for concealment of the particulars. In the first instance the officer himself issued the penalty notice on 20th March, 1965, requiring the assessee to appear before him, but subsequently on 15th March, 1967, he issued a second notice requiring the assessee to appear before the IAC. The IAC also issued separate notices to the assessee. It was held that notice was duly served and an order imposing penalty of Rs. 3,000 was passed under Section 271(1)(c) of the I.T. Act, 1961. It was held by the Division Bench of the Delhi High Court in that case that, in those circumstances, laying down the burden of proof on the department would make the provision for the imposition of penalty wholly unworkable. If even after the assessee had admitted that the two amounts be treated as its concealed income the department had still to prove by independent evidence that the assessee had concealed its income, it would defeat the purpose of the provisions. The levy of penalty for concealment of income was, therefore, justified. It was, therefore, urged on the basis of these observations that in view of the disclosure petition and the conduct of the assessee in respect of disclosing false return for the subsequent year 1960-61 as well as 1957-58 which were admitted by the assessee by the fact of disclosure petition it would not be necessary for the revenue to prove again that the assessee had concealed his particulars of income. Our attention was drawn to a decision of this court in the case of CIT v. P. B. Shah & Co. P. Ltd. : 113ITR587(Cal) , where the Division Bench observed that even though the entire onus was on the revenue to prove that the cash credits represented the concealed income of the assessee, yet, where in the statement of case it had been stated that the assessee was willing to have the same treated as its undisclosed income, then in penalty proceedings the department had no further duty to show that the sum was the assessee's concealed income. Since in that matter,this aspect had not been considered by the Tribunal, the matter was remanded to the Tribunal. Reliance in this connection was placed on the decision of the Division Bench of the Delhi High Court, referred to hereinbefore.
10. Learned advocate for the revenue also drew our attention to the decision of the Rajasthan High Court in the case of CIT v. Dr. R. C. Gupta and Co. , where the Division Bench observed that in a case where the assessee himself had admitted that a certain amount represented his income, no further evidence would be necessary to show that it was the amount which represent his income and/or that it represented his concealed income. In that case for the assessment year 1959-60, the assessee himself had admitted that he derived income from the sale of imported sets of cycle parts which income was not recorded in his books of account. Though the assessee did not show the income in his return, he agreed to the inclusion of the assessable income. There was sufficient evidence and the Division Bench held that the penalty could be validly imposed under Section 271(1)(c) of the I.T. Act, 1961, for concealing the profits of the sale made of the imported cycle parts.
11. The principle for imposing penalty, in our opinion, is now well settled by the decision of the Supreme Court in the case of CIT v. Anwar Ali : 76ITR696(SC) , where the Supreme Court emphasised that the proceedings under Section 28 of the Indian I.T. Act, 1922, which is in pari materia with Section 271(c) of the I.T. Act, 1961, are penal in character. The gist of the offence showed that the assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars of such income ; incidentally we might refer that in the relevant year, with which we are concerned, this expression 'deliberately furnished inaccurate particulars' was there in the Act but subsequently, by an amendment, if there was a difference between the returned income and the income subsequently found, of a certain percentage, the onus lay on the assessee to prove that such failure was not deliberate and the burden was on the assessee to establish that the receipt of the income in dispute constituted the income of the assessee. If there was no evidence on record, the Supreme Court has emphasised, except the explanation given by the assessee, which explanation had been found to be false, it did not follow that the receipt constituted the assessee's taxable income. It would be properly legitimate to say, according to the Supreme Court, that the mere fact that the explanation of the assessee was false did not necessarily give rise to the inference that the disputed amount represented his income. It could not be said that the findings given in the assessment proceedings in determining or computing the tax was conclusive. However, that was considered to be good evidence. Before penalty could be imposed the entirety of thecircumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. In the assessment year 1947-48, while making the assessment of the assessee, the ITO had discovered an undisclosed bank account of the assessee in which the cash deposit of Rs. 87,000 had been made. According to the assessee's explanation, the same represented diverse amounts entrusted to him by his relatives who had got panicky during the communal riots in Bihar in 1946. The ITO rejected the explanation and computed the sum of Rs. 87,000 to tax as the assessee's income from undisclosed sources. Thereafter, a penalty of Rs. 66,000 was imposed on the assessee under Section 28(1)(c) of the Indian I.T. Act, 1922, for concealment of particulars of his income. On appeal, the Tribunal held that no penalty could be imposed on the ground that the onus lay upon the department to show by adequate evidence that the amount in the bank account was of a revenue nature and that the respondent had concealed it and the onus was not discharged by showing merely that the respondent's explanation was found to be unacceptable. The ITO had to find some materials, apart from the falsity of the assessee's explanation to support his findings, that the receipt from undisclosed sources was his income. The High Court upheld the Tribunal's finding. There was an appeal to the Supreme Court and the Supreme Court confirmed the decision of the High Court and held that, in the absence of cogent material evidence, apart from the falsity of the assessee's explanation, from which it could be inferred that the assessee had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the sources and where he disputed the amount as revenue receipts the penalty could not be imposed. Therefore, the Supreme Court emphasised that there must be cogent material. The Supreme Court further emphasised that the entirety of the circumstances had to be taken into consideration and the mere falsity of the explanation given by the assessee did not ipso facto lead to the conclusion that from the fact that the particular income, which had been added as the income of the assessee in a particular year, it could be said that the assessee had concealed the particulars of that income for that particular year.
12. On behalf of the assessee, it was stressed before us, and to a certain extent rightly, that the disclosure petition read in its proper context did not reveal that the assessee was admitting that this loan for the year 1957-58, or for the assessment year 1961-62, was actually the income of the assessee for this particular year. What the assessee's case was that the assessee had made income during the war years through blackmarkets because of the high prices of iron scraps and hardwares and when these cash moneys had accumulated in the hands of the assessee those were introduced in the business in the name of fictitious hundiwallas or name-lenders and these were shown as being loans, while those were not loans but represented the income made by the assessee in the years prior to 1955. It is true that the assessee did not admit or disclose that these moneys represented his income for the years in question but it also admitted that the assessee was showing these as fictitious loans which, in fact, those were not. If the entirety of the disclosure petition of the assessee is read together, and in our opinion it should be read as a whole, in view of the fact that there is no other evidence adduced by the revenue about the falsity of these transactions apart from the disclosure petition, in our opinion, the disclosure petition read in its proper light indicated that these were income taken from other sources or earnings of the assessee through black market or otherwise introduced in the business in those years. Therefore, the assessee was right in contending that the assessee did not admit these to be the income of the assessee for those years. The revenue was justified in adding these amounts as the income for those years in view of Section 68 of the I.T. Act, 1961, because these unaccounted money was found in the accounts of the assessee for those relevant years. But that addition though justified in the assessment would not lead to the conclusion that there was any cogent material or reliable material that those were the income of the assessee or that the income of the assessee on the cash credit, as such, had been concealed. But there is another aspect of the matter. If the assessee's version is taken to be correct, which in the absence of any other evidence we must accept to be correct, then, for the first year the assessee had disclosed in its return a sum of Rs. 4,154 as interest alleged to have been paid to those lenders, who were the bogus name-lenders. That was a false statement, false to the knowledge of the assessee and that fact is established by the very disclosure petition itself. The assessee suffered an assessment on that basis. Not only the particulars of the income were concealed, they were concealed, in our opinion, indisputably deliberately because it was nobody's case that the assessee did not know prior to the disclosure petition that the assessee had earned these moneys in black market prior to 1955. Indeed, the assessee's very case in the disclosure petition goes to establish that the assessee had admitted that he earned this money in black market in selling iron scraps and hardwares. If that is the position, then, in our opinion, the assessee had deliberately concealed the particulars of his income or furnished inaccurate particulars so far as the interest of Rs. 4,154 for the first year 1957-58 was concerned. Again, for the second year, that is to say, the year involved in this case, viz., 1961-62, the assessee had filed its returnbut the assessment had not been made. Before the assessment could be made, a voluntary disclosure had been made indicating the facts, as I have mentioned before. In that return, the assessee had shown an interest of Rs. 34,132 alleged to have been paid to those name-lenders, who had merely lent their names. If the disclosure petition is correct, then it is the irresistible conclusion that it was a deliberate act on the part of the assessee because the deliberateness would be evident from the mere fact that the assessee knowing these to be false had made this false statement to the revenue at the time of filing of the return.
13. Learned advocate for the assessee drew our attention to the observations of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa : 83ITR26(SC) , upon which the Tribunal had relied in the instant case. There, the Supreme Court has emphasised that an order imposing penalty for failure to carry out the statutory obligation was the result of a quasi-criminal proceeding and a penalty would not ordinarily be imposed unless a party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty could not be imposed merely because it was lawful to do so. It was not a question here of any technical breach. It was a case of deliberate falsehood. It was not also a case of failure of disclosing something which was not known correctly and that was also not the case of the assessee. The disclosure petition also negatived that contention on behalf of the assessee. So, the principle enunciated by the Supreme Court in the aforesaid decision would not be fully attracted and would not stand in the way of imposing penalty so far as deliberate omission on the part of assessee in disclosing false particulars of income and interest for these two years are concerned.
14. Our attention was also drawn to the observations of this court in the case of Sikri & Co. Pvt. Ltd. v. CIT : 106ITR682(Cal) , where some confessions were made by alleged hundiwallas. There was no admission by the assessee. The assessee was not confronted with those confessions. The assessee was not given any opportunity to lead any evidence contrary thereto. There, the Division Bench observed that though the addition of the amount on the basis of confessions could be justified in view of the nature of the confession and the circumstances apparent in this case the imposition of the penalty could not be made because it could not be established that there was any deliberate omission on the part of the assessee. Apart from the failure on the part of the assessee to prove the sources of the sum, there was no other evidence. But, in this case, apart from the '' failure to prove the sources of the sum, there was deliberate admission of the assessee that he had voluntarily disclosed the interest income. In thiscase, therefore, the ratio or the principle of that decision would not be attracted.
15. Our attention was also drawn to certain observations in the case of CIT v. Bhuramal Manickchand : 121ITR840(Cal) , where it was reiterated that penalty proceedings were penal in nature. Thereafter the court found on the basis of the facts there that it had not been proved apart from rejecting the explanation of the assessee that the assessee had deliberately given inaccurate particulars. The facts of that case were also entirely different.
16. In the case of CIT v. Ramdas Pharmacy : 77ITR276(Mad) , the Madras High Court held that in the case of CIT v. S. Raman Chettiar : 55ITR630(SC) , though the decision of the Supreme Court had not changed the entire legal position enunciated in the various decisions and it was held that the revised return should be voluntary to avoid penalty under Section 28(1)(c) and the filing of a revised return under Section 22(3) would not expatiate the contumacious conduct, if any, on the part of the assessee in not having disclosed the true income in the original return, it was not correct to state that the filing of the second return was of no consequence at all. On the basis of this decision it was urged that the filing of the disclosure petition made no difference. Disclosure petition may lead to the conclusion that the original return was not correct and it could not be said that the assessee had deliberately furnished inaccurate particulars or given a false return. It is true that the disclosure petition or the revised return could not be ignored and this factor must be taken into consideration. But the statement contained in the revised return or the circumstances leading to the filing of the revised return or the statement contained in the disclosure petition and the circumstances leading to the filing of the disclosure petition are relevant factors. If after consideration of these circumstances or the statement contained in the disclosure petition, it became abundantly clear that the original return was false then by merely admitting the falsity of the original return the subsequent return did not become a true statement or the assessee could be said to have not committed an offence for filing inaccurate particulars or false return.
17. Learned advocate for the assessee also drew our attention to the Gujarat High Court's decision in the case of D. V. Patel & Co. v. CIT : 100ITR524(Guj) , which more or less reiterated the same position. It also depends on the facts and circumstances of the case. We have discussed the particular nature of the statements contained in the disclosure petition, which, on its own admission, admitted the position that the interest shown in the return originally filed was falsely and deliberately shown. Our attention was also drawn to certain observations in the case of CIT v. Ashoka Marketing Ltd. : 103ITR543(SC) , where, at page 545, the SupremeCourt reiterated the principles that whether or not the assessee had concealed his income was a question to be decided on the facts and that since in that case the decision was based on the respondent's agreement with D. J. & Co., which the Tribunal had accepted as true, no question of law arose. The facts on which the Supreme Court made these observations were again entirely different.
18. In the case of CIT v. Khoday Eswarsa and Sons : 83ITR369(SC) , the Supreme Court reiterated the well-known principle that where in imposing a penalty the Tribunal had considered all aspects the High Court would be hesitant to interfere with the finding. That position, in our opinion, cannot be disputed. In this connection, the assessee also urged, relying on another decision of the Gujarat High Court in the case of CIT v. Vinaychand Harilal : 120ITR752(Guj) , that we must remember that the admission in this case was not that the income was the income of the year in question. Therefore, the assessee had not admitted that he had made any false return in the year in question.
19. To the same effect were the views of the Madras High Court in the case of CIT v. Gordhandas Moolchand : 116ITR893(Mad) . The learned advocate also drew our attention to certain observations made in the case of CIT v. Sarda Rice & Oil Mills : 117ITR917(Cal) , where, in a different context, this court reiterated the same principle. The learned advocate for the assessee also canvassed before us the theory that where there has been acquittal, this court should not hold the accused (sic) against the assessee. He drew our attention to the observations of the Supreme Court in the case of Dharamdeo Singh v. State of Bihar, : 1976CriLJ638 . We are afraid we are unable to appreciate the relevancy of the said decision here. There is no question of upholding any conviction or setting aside any order of acquittal. Here, we are concerned with the question of law whether the correct principle for the imposition of the penalty had been applied in the facts and circumstances of this case. On behalf of the revenue, it was urged that the assessee could not be permitted to urge that the disclosure petition did not indicate that the sums disclosed as the bogus income and added as the income of the year were not admitted by the assessee as the income of the assessee for the year in question. Therefore, it was urged that the assessee should not be permitted to agitate this aspect of the matter for the first time before this court when this question was not agitated before the Tribunal. We are afraid that we are unable to accept this position. The position that was agitated before the Tribunal was whether the penalty could be levied in view of the disclosure petition and in view of the other evidence before the authority. That question was wide enough to bring within it the consideration of the question, that is to say, that the disclosure petition did not disclose this incometo be the income of the assessee in respect of the particular year. We have set out the same. We have set out from the disclosure petition and given our opinion on the effect thereof. Therefore, in our opinion, the assessee was free to agitate the question. On this aspect, there was no separate argument advanced before the Tribunal.
20. In that view of the matter, we are of the opinion that, in view of the admission by the assessee in the disclosure petition that the unexplained cash credits represented its own income, the Tribunal was not justified in cancelling the order of penalty under Section 271(1)(c) of the I.T. Act, 1961, for the assessment years. But the quantum of the penalty will have to be re-examined by the Tribunal in the light of law as enunciated by the Supreme Court in the case of Mansukhlal and Brothers v. CIT : 73ITR546(SC) , as this aspect was not considered by the Tribunal. Accordingly, we answer the question in the negative and in favour of the revenue. We, however, direct that the Tribunal will proceed in considering the quantum of penalty in accordance with the principle enunciated by the Supreme Court in the case of Mansukhlal and Brothers v. CIT : 73ITR546(SC) . In view of the conduct of the assessee, we direct the assessee will pay and bear the costs.
Sudhindra Mohan Guha, J.
21. I agree.