Pathak, J. - (1.) AS many as four questions have been referred by the Income-tax Appellate Tribunal for the opinion of this court. They are as follows: "(1) Whether the provision for imposition of a penalty under Clause (c) of Sub-section (1) of Section 28 of the Income-tax Act, 1922, is of a penal nature? (2) Whether the onus of establishing the conditions requisite for the imposition of a penalty under Section 28(1)(c) of the Act lies upon the revenue ? (3) Whether the conditions requisite for the imposition of a penalty under Section 28(1)(c) of the Act should be established beyond reasonable doubt ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal rightly held that none of the two conditions requisite for the imposition of a penalty under Section 28(1)(c) of the Income-tax Act, 1922, was satisfactorily established in either of the two years under reference?"
(2.) THE assessment years under consideration are the years 1955-56 and 1957-58, the relevant previous years being the years ending March 31, 1955, and March 31, 1957, respectively. The assessee is a Hindu undivided family carrying on business under the name and style of Banarsi Shah Charan Singh of Roorkee. During the assessment proceedings for the assessment year 1955-56 the Income-tax Officer noticed a number of cash credits totalling Rs. 19,600 in the accounts of different persons. The Income-tax Officer considered the explanation of those persons as to the source of the deposits and did not believe them. He treated the total amount of cash credits as the income of the assessee from undisclosed sources and included it in the total income of the assessee.
(3.) IN assessment proceedings for the assessment year 1957-58, the INcome-tax Officer noticed that the assessee had acquired a plot of land for Rs. 2,300 during the relevant previous year, but its price had not been paid from the funds in the account books of the assessee. The assessee explained that the price was paid from savings and previous withdrawals kept at home, which had not been entered in the account books. The explanation was not accepted. The INcome-tax Officer also noticed a credit entry of Rs. 1,350 in the account of one of the coparceners in the assessee's books. The explanation in respect of that amount was also rejected by him. Accordingly the two amounts were included in the assessee's total income for the assessment year 1955-56 as income from undisclosed sources. The assessee did not appeal against the assessment order. Thereafter the Income-tax Officer initiated proceedings under Section 28(1) of the Indian Income-tax Act, 1922, in respect of each of the two assessment years mentioned above. The assessee attempted the same explanation as had been adduced by it during the assessment proceedings and with the same result. The Income-tax Officer levied a penalty of Rs. 4,500 for the year 1955-56 and a penalty of Rs. 1,200 for the assessment year 1957-58. The assessee appealed against the penalty orders. The Appellate Assistant Commissioner of Income-tax reduced the amount of penalty in the two cases. Thereafter, the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal, holding that the burden of proof lay upon the department to establish that the assessee had wilfully or deliberately concealed its income in relation to the two assessment years and that the burden had not been discharged by the department, allowed the appeal and quashed the penalty orders.;