K. C. AGRAWAL, J. ( 1 ) AS directed by the High Court in I. T. A. No. 1106 of 1976, the Income-tax Appellate Tribunal has referred the following question : "whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the Appellate Assistant Commissioner was right in cancelling the penalty of Rs. 10,000 imposed under Section 271 (1) (c) of the Income-tax Act, 1961 ? " ( 2 ) THE assessee, M/s. Meerut Construction Company, Meerut, was a firm of contractors. A return was filed declaring Rs. 12,826 as its income. The Income-tax Officer raised the income to rs. 27,500 which was reduced in appeal to Rs. 22,000. As the returned income fell short of the assessed income by more than 20%, a penalty notice dated September 21, 1971, under Section 274 read with Section 271 (1) (c) of the Income-tax Act was issued. The Income-tax Officer held that the petitioner wilfully concealed the particulars of his income and, therefore, levied a penalty of Rs. 10,000 under Section 271 (1) (c) of the Income-tax Act. ( 3 ) AGGRIEVED, the assessee filed an appeal before the Appellate Assistant Commissioner of income-tax. The appeal was allowed by order dated March 25, 1975. The second appeal preferred by the Revenue was dismissed by order dated July 24, 1975. ( 4 ) IT was, thereafter, that the Department came to this court by means of an application under sub-section (2) o! Section 256 of the Income-tax Act. The application was allowed and the income-tax Appellate Tribunal was directed to draw up a statement of the case and refer the question to the High Court for its opinion. ( 5 ) THE argument advanced on behalf of the Revenue was that as the total income returned was less than eighty per cent. of the total income assessed, the case came within the ambit of the explanation to Section 271 (1) (c ). The effect of the Explanation was that when the total income returned was less than eighty per cent. of the total income assessed, the onus was on the assessee to prove that failure to file the correct return did not arise from any fraud or any gross or wilful neglect on his part. On that ground, the judgment of the Appellate Assistant Commissioner was also erroneous. of the total income assessed, the onus was on the assessee to prove that failure to file the correct return did not arise from any fraud or any gross or wilful neglect on his part. On that ground, the judgment of the Appellate Assistant Commissioner was also erroneous. ( 6 ) THE submission of the Revenue is well founded. Since the income returned was less than eighty per cent. of the income assessed, the Appellate Assistant Commissioner and so also the income-tax Appellate Tribunal illegally omitted to consider the Explanation to Section 271 (1) (c ). ( 7 ) IT may be true that the addition was made on the basis of an estimate but that did not mean that penalty could not be levied if the assessee failed to prove that the difference between the income returned and the income assessed was not due to any fraud or wilful negligence on its part. In addl. CIT v. Lakshmi Industries and Cold Storage Co. [1984] 146 ITR 492 (All), a Division bench held that merely because the addition in the income was made on the basis of a estimate, it did not mean that penalty could not be exigible if the assessee failed to prove that the difference between the income returned and the income assessed was not due to any fraud or gross or wilful neglect on his past in returning the correct income. ( 8 ) THE onus to discharge the presumption was on the assessee and it was for its to prove that the difference did not arise from any fraud or wilful neglect on its part. Had the Tribunal considered the Explanation in its true perspective and then recorded a finding, the same could be a finding of fact. This has, however, not been done. ( 9 ) IN CIT v. Mussadilal Ram Bharose [1987] 165 ITR 14, 20 ; [1987] 30 Taxman 546h, 546-I, the Supreme Court was called upon to consider a similar question. It held : "the effect of the Explanation to Section 271, after amendment by the Finance Act, 1964, was that where the total income returned by any person was less than 80 per cent. It held : "the effect of the Explanation to Section 271, after amendment by the Finance Act, 1964, was that where the total income returned by any person was less than 80 per cent. of the total income assessed, the onus was on such person to prove that the failure to file the correct income did not arise from any fraud or any gross or wilful neglect on his part and unless he did so, he should be deemed to have concealed the particulars of his income or furnished inaccurate particulars, for the purpose of Section 271 (1) (c ). The position is that the moment the stipulated difference was there, the onus that it was not the failure of the assessee or fraud of the assessee or neglect of the assessee that caused the difference shifted to the assessee, but it has to be borne in mind that though the onus shifted, the onus that was shifted was rebuttable. The rebuttal must be on materials relevant and cogent. " ( 10 ) IN the instant case, the Explanation to Section 271 (1) (c) was lost sight of by the Income-tax appellate Tribunal completely. ( 11 ) UNDOUBTEDLY, the presumptions raised by the Explanation being rebuttable presumptions, the tribunal should have considered the evidence and found whether the assessee had discharged it. This was not done. ( 12 ) IN the light of what we have said above, we return the question unanswered to the income-tax Appellate Tribunal with a direction to decide the appeal afresh. No order as to costs. .