JUDGMENT [ENTITY], J.
1. At the instance of the Revenue, this reference under [SECTION] of the [ACT], for short, "the Act", has been made. The reference reads thus :
"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in reducing the penalty under [SECTION] from Rs. 25,000 to Rs. 3,000 ?"
2. For the assessment year 1970-71, the assessee submitted a return for a sum of Rs. 1,01,805 and later he submitted a revised return for Rs. 1,09,406. However, the assessing authority computed the income at Rs. 2,08,018 and initiated penalty proceedings for concealment of income under [SECTION] of the Act. Since the maximum penalty imposible has exceeded the limit prescribed under the Act, the Income-tax Officer made a reference to the Inspecting Assistant Commissioner under [SECTION] of the Act. But by the time the Inspecting Assistant Commissioner took up the matter for consideration, the appeal against the assessment of the quantum filed by the assessee came up before the Appellate Tribunal. The Appellate Tribunal upheld the addition to the tune of Rs. 25,000 in addition to Rs. 7,600 admitted by the assessee in the revised return. On that basis, the Inspecting Assistant Commissioner found that the assessee has concealed Rs. 32,600 and levied penalty accordingly. On appeal, the Appellate Tribunal held that the assessee has admitted in the quantum appeal that he earned profits by sale of B.P. Sheets to the extent of Rs. 3,000 and to that extent it amounts to concealment. That assertion was conceded by the assessee during the hearing before the Appellate Tribunal. Accordingly it held that the Department has proved that the assessee has concealed the income of Rs. 3,000 and accordingly levied penalty of Rs. 3,000 and allowed the appeal accordingly. As stated earlier, at the instance of the Revenue, the above question has been referred.
3. We are not concerned with the amended law in this regard since the case is governed by the unamended provisions of the Act.
4. [SECTION] postulates that if the Income-tax Officer or the Appellate Assistant Commissioner or the Commissioner (Appeals) in the course of any proceedings under the Act, is satisfied that any person -
(a) (not relevant - hence omitted)
(b) (not relevant - hence omitted)
(c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - (sub-clauses (i) and (ii) not relevant - hence omitted)
(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income :
Provided that, if in a case falling under clause (c), the amount of income (as determined by the Income-tax Officer on assessment) in respect of which the particulars have been concealed or inaccurate particulars have been furnished exceeds a sum of twenty-five thousand rupees, the Income-tax Officer shall not issue any direction for payment by way of penalty without the previous approval of the Inspecting Assistant Commissioner.
5. In this case, since the pecuniary jurisdiction of the Income-tax Officer exceeds rupees twenty-five thousand under [SECTION], the competent authority to initiate penalty proceedings is the Inspecting Assistant Commissioner. Accordingly, the Inspecting Assistant Commissioner has initiated the penalty proceedings.
6. The question, therefore, for consideration is, whether the Department has established that the assessee has concealed a sum of Rs. 25,000 for the purpose of taxability. In [PRECEDENT] J., speaking for their Lordships of the Supreme Court, while considering the scope of [SECTION] of the [ACT], equivalent to [SECTION] of the Act, held that (at page 701) :
" the gist of the offence under [SECTION] is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and, therefore, the department must establish that the receipt of the amount in dispute contitutes income of the assessee. If there is no evidence on the record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes his taxable income It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income. It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive. However, it is good evidence. Before penalty can be imposed the entirety of circumstances 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."
It was further held : (vide headnote) "In the absence of cogent material evidence, apart from the falsity of the respondent's explanation, from which it could be inferred than the respondent had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the source and that the disputed amount was a revenue receipt, the penalty could not be imposed."
7. The same view was reiterated in [PRECEDENT] . A Division Bench of this court in [PRECEDENT] speaking through [ENTITY] J. (as he then was) also held (vide headnote) :
"The series of explanations given by an assessee, as regards source of the same income, which were found to be false by the Income-tax authorities, may be good evidence for addition of the said income to the income admitted by the assessee, but will not justify imposition of penalty under [SECTION] of the [ACT], unless there is positive evidence to the effect that the disputed income represents the income of the assessee and that the assessee had concealed the particulars of his income or deliberately furnished inaccurate particulars thereof."
8. Thus, it is now settled law that non-acceptance of the explanation of the assessee in the assessment proceedings in computing the income for the purpose of taxation and making an addition to the total taxable income on the basis of the available material, though may be relevant evidence, but by itself, is not conclusive. The penalty proceedings are quasi-criminal in nature. The burden is on the Department to prove that the receipt of the amount in dispute constitutes the income of the assessee. Falsity of Explanation of the assessee per se does not establish that the amount in dispute has resulted due to concealment. It may be good evidence. But yet, the Department has to establish that the assessee had concealed the income or furnished inaccurate particulars. Before imposition of penalty, the officer has to take the totality of the facts and circumstances into consideration and positive and conclusive evidence must be on record to arrive at a finding that the assessee had deliberately concealed the particulars or had wantonly furnished inaccurate particulars. In this case, from the record it is clear that during quantum proceedings, the sum of Rs. 25,000 was added on preponderance of probability of earning the income and accordingly an addition was made Rs. 25,000 to the income already returned by the assessee. But during the penalty proceedings, except to the extent of the admission of Rs. 3,000, there is no positive evidence placed on record by the Revenue to establish that Rs. 25,000 is the concealed income of the assessee. There is a long distance between "may be true" and "must be true". The Department has to travel all the was and prove that the assessee earned Rs. 25,000 and "has concealed" it. The Department moved no inch further that the record in quantum appeal. Under those circumstances, the Tribunal is well justified in finding that the Department has not established that the assessee has concealed a sum of Rs. 25,000 for the purpose of imposing penalty under [SECTION] of the Act. The reference in accordingly answered in favour of the assessee and against the Revenue. No costs.