D.A.MEHTA J. - (1.)THE Income Tax Appellate Tribunal, Ahmedabad Bench 'A', has referred the following question under section 256(1) of the Income Tax Act, 1961, ('the Act'), at the instance of the Commissioner of Income -tax.
'Whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied under section 271 (1) (c) on the ground that there cannot be any question of concealment of income when there is no income ?'

(2.)THE assessment year is 1983 -84. The assessee filed a return of income declaring total loss of Rs. 3,37,414. The assessee was assessed on a total income of Rs. 2,94,480. In the return of loss the assessee, who is a manufacturer of common salt, claimed loss of 6,200 tonnes of salt washed away on account of cyclone (5100 tonnes) and rain wash (1100 tonnes) valuing the loss of Rs. 50 per tonne. In support of the claim a certificate from the Deputy Commissioner of Salt to the effect that a loss of Rs. 2,40,000 had been suffered was produced. The assessing officer substituted the rate per tonne and adopting the figure of Rs. 118 per tonne computed the valuation of 6,200 tonnes along with 1093 tonnes of closing stock at a figure of Rs. 8,61,400. From the aforesaid figure after deducting Rs. 2,40,000, being loss certified by the Deputy Commissioner of Salt, the balance sum of Rs. 6,21,400 was added to the total income.
The assessment order was challenged in the appeal and the Commissioner (Appeals) directed to take the value of the stock at Rs. 50 per tonne as claimed by the assessee but rejected the assessee's claim of loss in terms of quantity in the absence of proof to support the same. Accordingly, against the addition of Rs. 6,21,400 the addition of Rs. 70,000 was confirmed by the Commissioner (Appeals).

(3.)THE assessing officer initiated penalty proceedings under section 271(1) (c) of the Act as, according to him, the assessee had failed to explain the loss in terms of quantity. After rejecting the explanation of the assessee he levied penalty at 100 per cent. of the tax sought to be evaded amounting to Rs. 25,250.