SEN ACTG., C.J.—By these applications under section 256 (2) of the Income Tax Act, 1961, the Commissioner of Income tax, Rajasthan II, requires the Appellate Tribunal, Ahmedabad Branch A to refer a certain question of law said to arise out of its consolidated order in Income-tax Appeals No. 321 to 323/JP of 1971-72 dated 24-11-73 pertaining to the assessment years 1957-58, 1961-62 and 1963-64, and out of its consolidated order in Income-tax Appeals No. 323 and 324/JP of 1973-74 dated 6-2 75 pertaining to the assessment years 1959-60 and 1960 61 to the High Court for its opinion namely,— "Whether on the facts and in the circumstances of the case, the Tribunal was justified in the penalty levied by the Income Tax Appellate Commissioner under section 271 (1) (c) of the Income-Tax Act, 1961, r/w the Explanation thereunder"? 2. The facts giving rise to these reference applications, in brief, are as follows: — 3. The assessee is the wife of Goswami Shri Brij Bhushan Lalji Maharaj of Kankrauli, the religious head of Pushti Marg Sampraday of Vaishnavites. The famous temple at Kankrauli belongs to this particular sect. The devotees and followers are mainly from the Western region and particularly from Gujarat and Bombay. The Books of Account maintained in respect of the temple at Kankrauli are known Shvi Krishan Bhandar. The assessee maintained no accounts for a number of years, but has started maintaining some accounts after Samwat 2020 relevant to the assessment year 1965-66. She is a pardanashin lady and is supposed to preach the religious-women followers of this particular sect. The devotees or the followers of this particular sect. offer bhent which may be described as gifts or offerings to the lady on occasions like, birth marriage and similar other occasions The birth of a male child in the family of religious head, it is said, is considered by the devotees as Krishna Janam. 4. The assessee has been investing in lands, shares, properties etc. and has also bank accounts. She has borrowed money on mortgage and she has also lent money to the temple Shri Krishna Bhagwan. There was a heavy deficit and it was found very difficult to maintain and perform the necessary daily Pooja and religious rites in honour of the Lord Dwarkanathji, the presiding deity. and has also bank accounts. She has borrowed money on mortgage and she has also lent money to the temple Shri Krishna Bhagwan. There was a heavy deficit and it was found very difficult to maintain and perform the necessary daily Pooja and religious rites in honour of the Lord Dwarkanathji, the presiding deity. On 26-10-66, in response: to notice, u/s 148 of the Income-tax Act, 1961 the assessee filed returns for the assessment years 1957-58, 1959-60, 1960 61-62 and 1963-64. For the assessment years 1957-58, she showed an income of Rs. 4.582/-, for the year 1959 60 Rs. 4,582/-, for the year 1960-64 Rs. 6,764/-, for the year 1961 62 Rs. 6,764/-, and for the year 1963-64 Rs. 6,764/-. On 24-3-70, she filed revised returns for the assessment years 1957-58, 1959-60 and 1960-61. For the assessment year 1957 58, she revised the return to Rs 4,845, for the year 1959-60 to Rs. 8,997/- and for the year 1960 61 to Rs. 22,212/-. On 2-9-69, she filed revised returns for the assessment years 1961-62 and 1963-64 For the assessment year 1961-62 she revised the return to Rs. 7,394/- and for the year 1963-64 to Rs. 8,406/-. 5. The Income-tax Officer determined the income of the assessee for the year 1957 58 at Rs. 6,439/- which was upheld by the Appellate Assistant Commissioner, who imposed a penalty of Rs. 6,439/- under section 271 (1) (c) of the Act. For the assessment year 1959-60, the Income-tax Officer determined the income at Rs. 9,382/-, but on appeal it was reduced by the Appellate Assistant Commissioner to Rs 4.382/- who imposed a penalty of Rs 4,440/- For the assessment year 1960 61, the Income-tax Officer determined her income at Rs. 11,650/ which on appeal, was upheld by the Appellate Assistant Commissioner who imposed a penalty of Rs 11,650/ . For the assessment year 1961-62, the Income tax Officer determined the income at Rs, 8,039/-, but it was reduced to Rs 6,039/-on appeal by the Appellate Assistant Commissioner who imposed a penalty of Rs. 6,039/-, Lastly, for the assessment year 1963 64, the Income tax Officer determined the income of the assessee to be Rs. 45,996/ which, on appeal, was upheld by the Appellate Assistant Commissioner who imposed on her a penalty of Rs. 6,039/-, Lastly, for the assessment year 1963 64, the Income tax Officer determined the income of the assessee to be Rs. 45,996/ which, on appeal, was upheld by the Appellate Assistant Commissioner who imposed on her a penalty of Rs. 50,000/- The Income-lax Tribunal by its various orders in question, while substantially upholding the additions made to the income of the assessee, set aside the penalty imposed on her by the Department under section 271 (1) (c) of the Act. 6. In deleting the penalty, the Appellate Tribunal observes,— "However, there is nothing to come to a firm conclusion that the amounts added definitely represented the income of the assessee and that too income of the respective years. Unless this is established in our view, imposition of penalty is not justified. We delets the penalties imposed u/s 271 (1) (c)" 7. In support of these reference applications, Shri S.K. Mal Lodha, learned counsel for the Revenue, strenuously contends that a question of law undoubtedly arises from the order of the Appellate Tribunal, inasmuch as there was an error in not applying Explanation to section 271 (1) (c) which reads as follows,— "271 (1):- If the Income tax officer or the appellate assistant Commissioner in the course of any proceedings under this Act, is satisfied that any person— (a) xxx xxx xxx xxx (b) xxx xxx xxx xxx (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-Explanation. Where the total income returned by any person is less than eithty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed under section 143 or section 144 147 (reduced by the expenditure incurred bona fide by him for the purpose of making or earning any income included in the total income but which has been disallowed as a deduction), such person shall, unless he proves that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part, be deemed to have concealed the particulars of his income or furnished irraccurate particulars of such income for the purposes of clause (c) of this sub-section." The learned counsel contends that there is a finding of concealment of income in the relevant years by the Appellate Tribunal in the quantum appeals. He relied upon the decision of their Lordships of the Supreme Court in Commissioner of Income-tax vs. Anwar Ali (1). He says that it was incumbent upon the Income Tax Tribunal to have noticed the Explanation as the revised returns were all filed after 1-4-1968 i.e. after the Explanation to section 271 (1) (c) of the Act was added by the Finance Act, 1964 w.e.f. 1-4-1966. In support of his contention, Shri Lodha formulated five propositions viz , (1) Explanation to section 271 (1) (c) of the Act was attracted in the cases as the returns were filed after 1-4-1968: Commissioner of Income tax vs. Data Ram Satpal (2); Commissioners of Income-tax, Orissa vs. K.C. Behera (3) and Commissioner of Income tax vs. K.C. Behera (4) after the insertion of the Explanation to section 271 (1) (c) in view of the presumption therein, the burden was on the assessee to show that the disparity between the return and the assessed income was not due to fraud of gross or wilful neglect on her part: Commissioner of Income-tax. U.P. vs. Kedar Nath Ram Nath Allahabad (5) if any finding is arrived at by the Appellate Tribunal by placing wrong burden i.e. there is erroneous approach a question of law arises : Parimisetti Seetharamamma vs. Commissioner of Income tax, Andhra Pradesh (6) and Commissioner of Income-tax, Paitala-I vs. Bharat Tubewell Stores (7) the question as formulated is a question of law; Commissioner of Income-tax, Patiala-I vs. Bharat Tubewell Stores, (8) supra, and the Additional Commissioner of Income-tax, Gujarat, Ahmedabad vs. Chandra Vilas Hotel (9) the decision in Commissioner of Income tax vs. Anwar Ali, supra, on which the appellate Tribunal relied has no application. 8. It is pointed out that the assessees explanation regarding the source of her concealed income in the relevant years was neither accepted nor rejected and, therefore, the finding of the Tribunal in paras 28 and 29 of the order, is vitiated. In support of the contention, reliance is placed on Dhirajlal Girdhari Lal vs. Commissioner of Income-tax. Bombay (9); Omar Salay Mohamed Sait vs. Commissioner of Income tax, Madras (10); Lalchand Bhagat Ambica Ram vs. Commissioner of Income-tax, Bihar (11) and Commissioner of Income-tax, W.B.I. vs. Anwar Ali (1) supra. It is further pointed that their Lordships in the Additional Commissioner of Income-tax, Gujarat, Ahemdabad vs. Chandra Vilas Hotel (8), supra, had called upon the High Court to refer an identical question under sec. 256 (2) as being a question of law. We are afraid, none of these contentions can be accepted. There is no need for us to deal with the decisions relied upon, as the principles are well settled. 9. In reply, Shri Kaji, learned counsel for the assessee rightly contends that it is not a question of the Explanation to sec. 271 (l)(c) of the Act not being lookeed at or not being applied. According to him, the question as framed does not arise from the order of the Tribunal at all. It is pointed out that no-body invoked the Explanation. He fairly concedes that the findings in the quantum appeal are not conclusive but they are good evidence as held by their Lordships in C.I.T. vs. Alwar Ali (1) supra. Further, he contends that the Tribunals findings are based on the totality of evidence. It is pointed out that no-body invoked the Explanation. He fairly concedes that the findings in the quantum appeal are not conclusive but they are good evidence as held by their Lordships in C.I.T. vs. Alwar Ali (1) supra. Further, he contends that the Tribunals findings are based on the totality of evidence. According to him, the assessee had three sources of" income viz , (1) agricultural income, (2) Bhents i.e. offerings made by the female followers of Pushti Marg Sampraday of Vaishnavitexs, and (3) home chest i.e. the accumulated cash lying in the chest. In view of this, he contends that the Tribunal was not certain in finding that the additions made in the relevant years represented the assessees income and that they pertained to the years in question. He, therefore, contends that the Appellate Tribunal was justified in deleting the penalties imposed under sec. 271 (l) (c) of the Act. There is, in our opinion, great force in the contention. 10. The principles which emerge from the decided cases are well settled. The levy of a penalty is not a matter of course. Though the findings given in assessment proceedings would be relevant and admissible materials in penalty proceedings, those findings cannot operate as resjudicata because the considerations that arise in penalty proceedings are different from those in assessment proceedings The fact that the assessees explanation regarding cash credit or other receipt is disbelieved, or the amount is assessed in bis hands, does not by itself justify the Department in imposing the penalty. The circumstances of the case must be such as to lead to the reasonable and positive conclusion that the amount represents the assessees income These principles were re-affirmed by their Lordships of the Supreme Court in C.I.T. vs. Anwar Ali (1), supra. In C.I T. vs. Khoday Eswaran (12) their Lordships further ruled that a penalty cannot be levied solely on the basis of the reasons given in the order of assessment. In Kanga and Palkhivalas The Law and Practice of Income-tax, 7lh Edition, Vol. In C.I T. vs. Khoday Eswaran (12) their Lordships further ruled that a penalty cannot be levied solely on the basis of the reasons given in the order of assessment. In Kanga and Palkhivalas The Law and Practice of Income-tax, 7lh Edition, Vol. 1 p. 1212 learned authors observe, - "There are two ways of approaching this question, both of which converge on the same conclusion: (a) as is establishjed by the cases cited above, in order to justify the levy of a penalty two factors must co-exitst: (1) there umst be some materials or circumstances leading to the reasonable conclusion that the amount does represent the assessees income, it being not enough for the purposes of penalty that the amount has been assessed as income; and (ii) the circumstances must show that there was animus, i.e. conscious concealment or conscious furnishing of inaccurate particulars on the part of the assessee. The explanation has no bearing on (i), but it has a bearing only on (ii). The Explanation does not make the assessment order conclusive evidence that the amount assessed was in fact the income of the assessee. No penalty can be imposed if the facts and circumstances are equally consistent with the hypothesis that the amount does not represent concealed income as with the hypothesis that it does. (b) Alternatively, even treating the Explanation as dealing with both the ingredients (i) and (ii) set out above, where the circumstances do not lead to the reasonable and positive inference that the assessees explanation is false, the assessee must be held to have proved that there was no fraud or gross or willful neglecton his part. Even in this view of the matter the Explanation cannot justify the levy of a penalty." That, in our view, is the true legal position. The above interpretation of the Explanation was accepted in C.I.T. vs. Karnail Singh, (13) which held that the Explanation does not entirely supersede the ratio of C.I.T. vs. Anwar Ali (1), supra. 11. As Palkhivala rightly points out that, in order to justify a levy of penalty, there must be some materials or circumstances leading to the reasonable conclusion that the amount does represent the assessees income. 11. As Palkhivala rightly points out that, in order to justify a levy of penalty, there must be some materials or circumstances leading to the reasonable conclusion that the amount does represent the assessees income. Here, the Appellate Tribunal, on the facts and circumstances of the case, held(l) that there is nothing to come to a firm conclusion that the amounts added bona fide represent the income of the assessee, and (2) that too income of the respective years. In our opinion, these are the findings of fact reached by the Appellate Tribunal on the totality of the evidence. There is no talk of any burden of proof. The question of applying the Explanation to sec 271 (l)(c) of the Act never arose. On the totality of the evidence, the Appellate Tribunal was unable to come to a firm conclusion that the amounts added were, in fact, the income of the assessee and that *hey were income of the relevant years The question whether there is or is not the concealment of income for purposes of levy of a penalty under sec. 271 (l)(c) is essentially a question of fact : Additional Commissioner of Income-tax, Rajasthan vs. Gem Palace (14); Commissioner of I.T. vs. Devendra Singh (15) Commissioner of I.T. vs. Faizuddin (23) and Commissioner of Income-tax vs. G.L Taxtilcs (24) Looking to the source of funds in the hands of the assessee, we cannot see that the findings of the Appellate Tribunal are either perverse or based on mere surmises and conjectures. In para 23, the Tribunal explains why the Additions were made. In para 29 the Tribunal comes to the categoris conclusion that it was unable to come to a firm conclusion that the additions truly represented the income of the assessee. The provisiones contained in sec. 271 (l)(c) of the Act for the levy of a penalty, therefore, did not apply. 12. We are conscious that their Lordships of the Supreme Court in the Additional Commissioner of Income-tax, Gujarat, Ahmedabad vs. Chadra Vilas Hotal (22) supra, directed the Gujarat High Court to call for a reference of an identical question, stating that it was a question of law. But on a closer examination it would appear that the case is distinguishable on facts. But on a closer examination it would appear that the case is distinguishable on facts. There, the Tribunal on the facts and in the circumstances of that case, held that the assessee was not guilty of any fraud or gross or wilful neglect in returning the income, which resulted in the income being returned at a figurs lower than 80% of the income assessed. That was, therefore, a case directly covered by the Explanation to sec. 271 (l)(c). The question before their Lordships was whether the Tribunal was justified in arriving at that finding, contrary to the material on record. Their Lordships, therefore, framed question No. (1) as to whether the assessee had discharged the burden placed upon him under the Explanation. Then comes to question No. (2), which is identical as in the present set of cases. In those circumstances, question No. 2 was, in our view, inter-dependent on question No. 1. It cannot, therefore, be said on the authority of their Lordships decision in Additional C.I.T. Gujarat Ahmedabad vs. Chandra Vilas Hotel, (26) supra that the question as framed by itself amount to a question of law. The question whether the Explanation applies or not depends on the facts and circumstances of each particular case. For similar reasons, our decision in C.I T. Jodhpur at Jaipur vs. Smt Satnam Mallick (27), D.B. Income Tax Case No 32/77, decided on 23-1-1978, relied upon by Shri Lodha, learned counsel for the Revenue, is clearly distinguishable on facts. 13. For all these reasons, these applications under sec. 256 (2) of the Income-tax Act, 1961 must fail and are accordingly dismissed. There shall, however, be no order as to costs.