JUDGMENT Guttal, J. 1. In this petition by the Commissioner of Income Tax (hereinafter referred to as the petitioner), the question which arises for consideration- is whether any question of law arises out of the order of the Income Tax Appellate Tribunal dated 22nd December, 1983 in I. T. Appeal No. 321 (Coch)/1982, made under S.254 of the Income Tax Act (hereinafter referred to as the Act). The question arises out of the facts set out in Para.2 and 3 below. The assessee is -hereinafter referred to as the respondent. 2. In a search of the Respondent's premises made on 12th January 1977, the books of accounts including the stock register and inventories were seized by the petitioner. The respondent filed his income tax return for the assessment year 1977-78 (accounting year ending on 31st December 1976) declaring an income of Rs. 85,200- The 1991 (3) ILR(Ker) 109 (i) There were duplication of entries in the stock register which caused the discrepancy. (ii) The damaged goods had not been accounted for, and allowance made for them. (iii) The books of account were with the petitioner from 12th January 1977. The respondent made the statements about the value of his closing stock, on 31st December 1977, at a time when the books required for making an accurate statem On 14th March 1980 the Income Tax Officer I.T.O. for short rejected the explanation of the respondent and assessed the income of the respondent by adding Rs. 1,71,341 to the declared income. The total taxable income was held to be Rs. 2,77,410. This assessment was upheld by the Commissioner of Income Tax (Appeals). The Income Tax Appellate Tribunal exercising jurisdiction under S.254, of the Act, upheld the addition of the sum of Rs. 1,71,341.00 to the declared income. 3. The I.T.O. commenced proceedings under S.271(1)(c), for levying penalty, as, he considered that the respondent had "concealed the particulars of his income." The I.T.O. by his order dated 31st October, 1981 in PN 7323/ EKM (B) held that Rs. 1,71,341.00 could be treated as concealed income", and levied penalty of Rs.1,20,000. The Commissioner of Income Tax (Appeals) by his order dated 17th February, 1982 in Appeal No. IT-47-E/CIT/81-82 allowed the appeal and set aside the penalty imposed on the respondent. He held that the respondent had not concealed the particulars of his income. 1,71,341.00 could be treated as concealed income", and levied penalty of Rs.1,20,000. The Commissioner of Income Tax (Appeals) by his order dated 17th February, 1982 in Appeal No. IT-47-E/CIT/81-82 allowed the appeal and set aside the penalty imposed on the respondent. He held that the respondent had not concealed the particulars of his income. His reasons were: (a) Since the details of the respondent's stocks were known to the petitioner who possessed all the account books for the 11 months preceding the filing of the income tax return, the element of secrecy which is the essence of concealment was absent from the transaction, and (b) Since the petitioner knew the position of the stocks and its value from the account books in his possession, the respondent cannot be said to have concealed the particulars of his income.The Income Tax Appellate Tribunal, Cochin Bench, by its order dated 22nd December, 1983 in I.T.A. No. 321(Coch)/ 1982 confirmed the decision of the Commissioner of Income Tax (Appeals) whereby the penalty was cancelled. 4. Whether a "question" "arises" and whether such question is answerable in favour of the respondent are two distinct matters. We wish to emphasise the distinction between the existence of a question and the answerability of such question, in order to avoid loss of perspective of the matter. The existence of a question is one thing. The existence of an answer is quite another. We are dealing with the stage of proceedings where we are not called upon to answer a reference made under S.256 of the Income Tax Act. We are at a stage where the existence of a question of the kind referred to in S.256 of the Act is being considered. 5. In its literal meaning "question" means interrogative sentence soliciting an answer. It may be a ' query or an enquiry. But it is of the essence of a "question" that it presents a doubt and demands an answer. A question "arises" when such interrogatory enquiry springs into view, rises or appears. The petitioner urged that the respondent by declaring stock of lesser value "concealed" his income. The respondent offered the explanation set out in paragraph No. 2 above and urged that he did not. In Considering whether a question of concealment of particulars of income arises, the truth or otherwise of the respondent's explanation is not relevant. The petitioner urged that the respondent by declaring stock of lesser value "concealed" his income. The respondent offered the explanation set out in paragraph No. 2 above and urged that he did not. In Considering whether a question of concealment of particulars of income arises, the truth or otherwise of the respondent's explanation is not relevant. Even where a question has been answered and was always answerable, in favour of the respondent, the fact remains that the question does arise. We thought it necessary to distinguish between the existence of a question and the existence of an answer because the respondent, relying upon the proviso to Explanation I of sub-section (1) of S.271 of the Act, urged that his explanation being bona fide, his failure to substantiate his explanation about the discrepancy in the value of the stocks, does not attract penalty. If the respondent, by reason of the bona fides of his conduct, has, as he claims, a complete answer to the case of concealment of income, the question, may be answered in his favour. But the question does not cease to exist; indeed the existence of an answer accentuates the presence of the question. 6. The Income Tax Appellate Tribunal made the order under S.254 of the Act. The question whether the respondent) "has concealed the particulars of his income" was urged " before the Tribunal in the proceedings under S.271 of the Act. The Tribunal answered in favour of the respondent. However, in view of the judgment of the Supreme Court in Scindia Steam Navigation Co. Ltd. (Commissioner of Income Tax, Bombay v. Scindia Steam Navigation Co. Ltd. AIR 1961 SC 1633 ) and having regard to the essentials of a question we hold that a question about the concealment of the particulars of income by the respondent arises out of the order of the Income Tax Appellate Tribunal made under S.254 of the Act. 7. The next question is: Is it a question of law? Concealment of particulars of income is an inference which flows from certain evidence such as the statements annexed to the income tax return filed by the respondent and their scrutiny with reference to the account books. The discrepancy is admitted but is explained by the respondent. On a superficial view "concealment of particulars of income" appears to be question of fact. The discrepancy is admitted but is explained by the respondent. On a superficial view "concealment of particulars of income" appears to be question of fact. The inference that the respondent concealed his income attracts the consequence of penalty, the levy of which depends on the construction of the proviso to Explanation I to sub-section (1) of S.271 on which the respondent has placed reliance. The circumstances which give rise to a question of law are varied and cannot be encapsuled in a single proposition. A finding of fact based on surmises, or in violation of fundamental rules of justice s in Dhakeshwari Cotton Mills Ltd. (Dhakeshwari Cotton Mills Ltd. v. Commissioner of Income Tax, XXVI ITR 775), a finding of fact arrived at by misconstruction of a document as in Sivakasi Metal Exporting Co. (Sivakasi Metal Exporting Co. v. Commissioner of Income Tax, Madras, 53 ITR 204 (1964)), or a finding which depends upon interpretation of statutory provisions, as in Liquidators of Pursa Ltd. (Liquidators of Pursa Ltd. v. Commissioner of Income Tax Bihar, XXV ITR 265 (1954)), illustrate how the apparently factual character of a question may, in reality, be a question of law. Where, as in this case, the ultimate finding that the respondent concealed particulars of his income, is an inference to be drawn from the admitted discrepancy in the value of the closing stock, the explanation offered by the respondent and consideration of the true meaning of "concealment" the essence of which is secrecy and deception, what we have, is a mixed question of law and fact. And where there is a mixed question of law and fact, the inference from the facts found is a question of law (Sree Meenakshi Mills Ltd. v. Commissioner of Income Tax, Madras, XXXI ITR 28 (1957)). Concealment of particulars of income by an assessee attracts penalty stipulated by S.271 of the Act. The finding of concealment of particulars of income is thus related to the consequence of penalty. In the proceedings under S.271 of the Act the explanation of the respondent has a distinct significance. If he fails to substantiate the explanation, the amount added to his income viz. Rs. 1,71,341.00 is deemed to represent the income in respect of which particulars have been, concealed (Explanation I Clause (B) of sub-section (1) of S.271). In the proceedings under S.271 of the Act the explanation of the respondent has a distinct significance. If he fails to substantiate the explanation, the amount added to his income viz. Rs. 1,71,341.00 is deemed to represent the income in respect of which particulars have been, concealed (Explanation I Clause (B) of sub-section (1) of S.271). But, if, as urged by the respondent, his explanation is bona fide, the consequence laid down in clause (B) of Explanation I, may not follow (Proviso to Explanation.1 sub-section (1) of S.271 of the Act). 8. Therefore, the facts of the case before us raise a question beyond the fact of concealment. In order to attract the consequence of penalty, the proviso to Explanation I clause (B) needs to be considered. The application of the statutory revision, is an additional factor which makes the question of concealment, of particulars of income by the respondent, a question of law. 9. Learned counsel for the petitioner cited this Court's judgments in Commissioner of Income Tax v. P. T. Antony & Sons (151 ITR 34), C.I.T. Kerala II v. Haji P. Mohammed (132 ITR 623) and the Judgment of Orissa High Court in Commissioner of Income Tax, Orissa v. Laxmi Auto Stores (106 ITR 626). The Judgments in these cases were in answer to references under S.256 of the Act and the question whether a reference ought to have been made did not arise for consideration. 10. For the reasons stated in the foregoing paragraphs, we hold that a question of law arises out of the order of the Income Tax Appellate Tribunal made under S.254 of the Act. We therefore direct, the Income Tax Appellate Tribunal Cochin Bench to state the case and refer the following question to the High Court under S.256(2) of the Act: Whether having regard to the facts and circumstances of this case and having regard to the provisions of S.271(1) of the Act, the Appellate Tribunal was right in holding that the assessee cannot be said to have concealed any income or intended to furnish inaccurate particulars thereof, and that therefore penalty was not leviable under S.271(1)(c). 11. The petition is allowed. In the circumstances we make no order as to costs.