Judgment 1. This is a reference under Sec.256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The question that falls for consideration and referred to us is : "Whether, on the facts and in the circumstances of this case, the onus was on the department to prove that the assessee concealed his income or furnished inaccurate particulars thereof, or that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part within the meaning of Sec.271(1)(c) read with the Explanation of the Income-tax Act, 1961 ?". 2. The facts, in brief, are that the assessee filed its original return showing an income of Rs. 4,65,965. Thereafter, a revised return was filed showing loss of Rs. 1,00,415. The assessment was ultimately made on an income of Rs. 7,97,638. This figure was arrived at by certain additions and disallowance of deductions claimed. The Income-tax Officer, finding concealment of income, initiated proceedings for levy of penalty. The penalty liable to be levied being a sum exceeding rupees one thousand, the matter was referred to the Inspecting Assistant Commissioner. The latter levied a penalty of Rs. 86,500. The assessee being aggrieved by the levy of penalty by the Inspecting Assistant Commissioner appealed to the Appellate Tribunal. The Tribunal set aside the penalty on two counts, firstly, that there was no mens rea in the concealment, which was essential for the imposition of penalty and, secondly, that the additions and disallowances were just made on estimate and that they had not been proved by cogent materials by the Department that the assessee earned some profits other than those shown in the books which were not accounted for. The Tribunal based its decision upon CIT V/s. Anwar Ali [1970] 76 ITR 696 (SC). From the order of the Tribunal, it appears that it was of the view that the onus to prove the concealment was upon the Department and that there was no mens rea on the part of the assessee. These considerations are irrelevant now, after the amendment of Sec.271(1)(c) of the Act and incorporation of the Explanation to that provision of law. These considerations are irrelevant now, after the amendment of Sec.271(1)(c) of the Act and incorporation of the Explanation to that provision of law. The scope and ambit of the Explanation vis-a-vis the onus cast upon the assessee and the Department came up for consideration before a Full Bench of this court presided over by Hon ble the Chief Justice in CIT V/s. Nathulal Agarwala and Sons [1985] 153 ITR 292. (Tax case No. 65 of 1974, disposed of on 12th March, 1985). The decision of Sandhawalia C.J., which was the leading judgment, laid down as follows (at page 302) : "A close reading of the latter part of the Explanation would indicate that once it is held that it is applicable to the case of an assessee, it straightaway raises three legal presumptions against him. For claritys sake, these may be formulated as under : (i) that the amount of the assessed income is the correct income and it is in fact the income of the assessee himself; (ii) that the failure of the assessee to return the aforesaid correct income was due to concealment of the particulars of his income on his part; or (iii) that such failure of the assessee was due to furnishing inaccurate particulars of such income." 3. Proceeding onward his Lordship observed that from the above presumption, it must follow that the onus is upon the assessee to establish/prove that there was no failure on the part of the assessee to return the aforesaid correct income as assessed. The sum and substance of the law laid down by the Full Bench is that the onus of establishing concealment in penalty proceeding is not upon the Revenue. But circumstances which might indicate that there was no failure on the part of the assessee to return the correct income have to be shown by the assessee. The Tribunal, therefore, erred in law in setting aside the penalty on the ground that the Department has not proved by cogent materials that the assessee had earned profits other than those shown in the books, which had not been accounted for. The onus was not upon the Department, but upon the assessee. The Tribunal, therefore, erred in law in setting aside the penalty on the ground that the Department has not proved by cogent materials that the assessee had earned profits other than those shown in the books, which had not been accounted for. The onus was not upon the Department, but upon the assessee. In regard to the application of the principle of mens rea in the matter of imposition of penalty, the Full Bench observed in paragraph 16 that "within the tax field as such, there is no room for bringing in the rules of criminal law and insist on mens rea or proof beyond all reasonable doubt". Thus mens rea must be ruled out. The Tribunal, therefore, appreciated the facts from a wrong view of the law. The Tribunal had to appreciate the facts keeping in view the obligation cast upon the assessee by the Explanation to Sec.271(1)(c) of the Act. The reference, therefore, must be answered in favour of the Revenue and against the assessee. 4. The above view of ours, however, does not conclude matters. The facts were appreciated from a wrong view of the law. The Tribunal was obliged to appreciate the facts keeping the correct law in view. That has not been done. The mutter is, therefore, remanded to the Tribunal which will reappraise the facts, come to its conclusion on the questions of facts after hearing the parties and dispose of the appeal in accordance with law laid down by us. 5. We wish to make it absolutely clear that the revised return was filed in 1966. The Explanation to Sec.271(1)(c) must have full play in its application to the facts of this case.