(1.) IN compliance with the direction given by this Court in tcp Nos. 32 to 35 of 1980, the Tribunal referred the following common question of law, for the opinion of this Court, under s. 256 (2) of the IT Act, 1961. "whether, on the facts and in the circumstances of the case, was the Tribunal correct in law in holding that the assessee had not concealed/furnished inaccurate particulars of his income and in deleting the penalties imposed under s. 271 (1) (c) of the IT Act, 1961, for the asst. yrs. 1964-65, 1965-66, 1966-67 and 1967-68 accordingly "" *
(2.) THE assessee was a permanent way inspector of Southern railway, Salem . During the accounting year, relevant to the asst. yr. 1964-65 under appeal, he was being assessed to income-tax only in respect of the salary income. THEre was a search in his residence on 10th February, 196 7 on the ground that he was in possession of assets valued at about Rs. 1, 25, 000, which was disproportionate to his income. He was prosecuted and convicted by the special judge, Madras, under s. 5 (2) r/w s. 5 (1) (a) of the Prevention of Corruption Act. THE IT authorities reopened the assessment of the assessee for the reason that the investments representing the income assessable under s. 69a of the IT Act, 1961, had escaped assessment. THE assessee filed returns admitting income from salary and also the interest from deposits in banks. However, in Part III of the return, the assessee showed the value of the investments, but claimed exemption on the ground that he had the resources with him even prior to 1st April, 1963 THE details of the investments made by the assessee for the accounting years ended on 31st March, 1964 , 31st March, 1965 , 31st March, 1966 and 31st March, 1967 were furnished by the ITO in the income-tax assessment made under s. 143 (3) r/w s. 147 (a ). According to the assessee, he had got from his mother about 1000 and add sovereigns and out of the sale proceeds thereof, the investments both in this own and in the name of his wife were made. THE ITO held that the assessee had not satisfactorily accounted for the investments made, and therefore, the amounts were assessable under s. 69a of the IT Act, 1961. Accordingly, the income of the assessee was computed by adding the value of the investments shown as on 31st March, 1964 of Rs. 83, 410 under s. 69a. THE ITO initiated penalty proceedings for concealment of income. THE matter was referred to the IAC under s. 274 (2) of the Act. THE assessee filed a written submission, dt. 19th February, 1977. In the written submission, it was contended that the assessee had disclosed the investments in Part III of his return. Alternatively it was contended that penalty should be calculated based upon the tax avoided. THE IAC was of the view that the investments were made from sources kept outside the knowledge of the IT Department, and, therefore, the assessee was guilty of concealment of income as well as furnishing of inaccurate particulars of such income. Observing that there was concealment, even in the revised return, the IAC held that levy of penalty under s. 271 (1) (c) of the Act is warranted. Aggrieved, the assessee failed appeal before the Tribunal. On considering the provisions of s. 69a, the tribunal held that for the purpose of s. 271 (1) (c) of the Act, it is necessary for the Revenue to show that the assessee concealed the particulars of his income earned during the accounting year, relevant to the assessment year under consideration. THE Tribunal held that the charge of concealment under s. 271 (1) (c) of the Act is not made out. In as much as the Tribunal came to the conclusion that there is no concealment or furnishing of inaccurate particulars, the levy of penalty under s. 271 (1) (c) of the Act is not warranted