ORDER B.N. Sapru, J. - This application u/s 256(2) of the income tax Act, 1961 ('the Act') has been filed by the Commissioner, New Delhi, against the order dated 31-3-1984 passed by the Tribunal dismissing the appeal filed by the Commissioner against the order of the Commissioner (Appeals). Certain deductions had been claimed by the assessee in respect of six items which were disallowed in the assessment proceedings. On the ground that there was difference of more than 20 per cent between the assessed income of the assessee and the returned income, the matter was referred to the IAC, who imposed a penalty of Rs. 80 lakhs. On an appeal by the assessee, the Commissioner (Appeals) set aside the penalty, inter alia, on the ground that the Explanation to section 271(1)(c) of the Act applied as it stood in 1964. The Commissioner (Appeals) was satisfied that the deduction which the assessee had claimed and which had been disallowed had been bonafidely claimed by the assessee. 2. The Commissioner appealed before the Tribunal, which held that the Commissioner (Appeals) had wrongly applied the Explanation to section 271(1)(c), as it stood earlier, and held that the Explanation as added in the year 1976 applied. However, the Tribunal found that the order of the Commissioner (Appeals) did not suffer from any such defect which required interference in appeal by the Tribunal. 3. u/s 271(1)(c), while computing the difference between the assessed income and the returned income, the Explanation to section 271(1) as introduced in 1984 is as under: Where the total income returned by any person is less than eighty per cent of the total income (hereinafter in this Explanation referred to as the correct income) as assessed u/s 143 or section 144 or section 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 inaccurate particulars of such income for the proposes of clause (c) of this sub-section. This Explanation makes it very clear that before taking proceedings u/s 271(1)(c), the calculations, as required by the Explanation, have to be done. On the facts of the present case, it is clear that if the deductions claimed, which have been disallowed, are not taken into account, there is no other item which would make any difference between the returned income and the assessed income. These calculations not having been done, the entire proceedings u/s 271(1)(c) were misconceived as against the assessee. 4. We agree with the standing counsel for the department that the newly added Explanation to section 271(1)(c) in 1976 was not applicable. 5. However, in the facts and circumstances of the case, even though the Tribunal was not correct in holding that the Explanation to section 271(1)(c) added in 1976 was applicable, the questions raised are purely academic and do not require any answer. The application is, accordingly, dismissed with costs which we assess at Rs. 125. We are indebted to the Learned Counsels for the parties for their very able arguments in this case.