S.P. Goyal, J. - (1.) THE assessee, a registered firm, carried on business as dealer in gur and shakar and also as commission agent. For the assessment year 1970-71, it filed a return showing an income of Rs. 8,660. THE assessing authority assessed the income at Rs. 1,02,050 which was reduced to Rs. 99,760 by the Appellate Assistant Commissioner and to Rs. 94,760 by the Tribunal. THE Income-tax Officer had found during the course of the proceedings that the assessee had been doing business outside its books and had invested an amount of Rs. 78,075. As the explanation furnished by the assessee was found to be unsatisfactory, he added this amount to the income of the assessee taking it to be income from undisclosed sources. It is not disputed that the order of the Tribunal has since been affirmed by this court.
(2.) APART from the assessment proceedings, the Income-tax Officer also instituted penalty proceedings and on a reference from him, the Inspecting Assistant Commissioner imposed a penalty of Rs. 80,000 as against the maximum leviable penalty of Rs. 1,56,150. On appeal, the Tribunal accepted the explanation holding that the version of the assessee rings a note of plausibility and reversed that order. Aggrieved thereby, the Revenue moved an application under Section 256(1) of the Income-tax Act (hereinafter called "the Act") which was allowed and the following three questions have been referred to this court : "(i) Whether the Tribunal has been right in law in holding that when the Income-tax Officer and the Inspecting Assistant Commissioner did not invoke the Explanation to Section 271(1)(c) of the Income-tax Act, 1961, the Revenue for the first time could not support the levy of penalty with the help of the said Explanation as such course comes in conflict with the safeguards provided under Section 274 of the Income-tax Act, 1961 ? (ii) Whether the Tribunal has been right in law in holding that under the Explanation to Section 271(1)(c), only minimum penalty, as prescribed under Section 271(1)(c) is imposable ? (iii) Whether the Tribunal has been right in law in cancelling the penalty of Rs. 80,000 in the case ?" Learned counsel for the assessee has fairly conceded that questions Nos. (i) and (ii) are liable to be answered in favour of the Revenue and against the assessee. We order accordingly. On the third question, learned counsel for the Revenue contended that the Tribunal in holding that no penalty was exigible relied on Addl. CIT v. Karnail Singh [1974] 94 ITR 505 (P& H). As the decision in the said case has been overruled by the Full Bench of this court in Vishwakarma Industries v. CIT [1982] 135 ITR 652, the order of the Tribunal was also liable to be reversed. We, however, do not find any merit in this contention. Reliance on Karnait Singh's case [1974J 94 ITR 505 (P & H) was placed by learned counsel for the assessee and not by the Tribunal. As noticed above, the Tribunal, on an appreciation of the material, recorded a finding of fact that the version of the assessee rings a note of plausibility. The assessee got the account books of the party at Muzaffarnagar produced to show that the goods had been purchased on credit and all payments made after disposing of the same. This explanation was accepted by the Tribunal. The finding recorded by the Tribunal being a finding of fact would be binding on this court. Once that finding is accepted, obviously no penalty would be leviable. Learned counsel for the Revenue, however, contended that in view of the Explanation, it would be for the assessee to explain the source of the concealed income. There can be no dispute with this proposition. But as already noticed above, the explanation offered by the assessee that there was no concealed income has been accepted which means that the burden placed , on the assessee by the Explanation stands discharged. No fault, therefore, could be found with the order of the Tribunal and question No. (iii) is accordingly answered in the affirmative, that is, against the Revenue and in favour of the assessee. No costs.;