Judgment :- THANIKKACHALAM, J. In pursuance of the directions given by this Court, the Tribunal referred the following two questions of law for our opinion: "1. Whether, on the acts and in the circumstances of the case and having regard to the provisions of Explanation to s. 271(1)(c) of the IT Act, 1961, the penalties levied under s. 271(1)(c) of the IT Act were rightly cancelled by the Tribunal for the asst. yrs. 1970-71 to 1973-74 in the assessee's case? 2. Whether, on the facts and in the circumstances of the case, Tribunal's view that the disclosure of information by the assessee was voluntary, is based on valid and relevant materials and is sustainable in law?" 2. The assessee is a partnership firm of three partners and in the asst. yrs. 1970-71 to 1973-74 the assessee-firm was mainly engaged in the business of kailies and lungies. The details of the income returned and assessed for the asst. yrs. 1970-71 to 1973-74 are as under: Income Asst. yr. Date of filing Returned Assessed of the return (Rs.) (Rs.) 1970-71 24.1.1972 2, 57, 937 5, 87, 200 1971-72 25.3.1972 3, 47, 022 4, 32, 020 1972-73 19.8.1972 1, 39, 458 2, 99, 858 1973-74 16.8.1973 1, 30, 730 2, 09, 810 The difference between the income returned and income assessed for the four assessment years mainly arose due to inclusion of the income in moneylending business, which was omitted to be disclosed by the assessee. The income so included for the various assessment years are as under: Asst. yr. Income from moneylending business. (Rs.) 1970-71 85, 000 1971-72 85, 000 1972-73 1, 51, 400 1973-74 77, 900 3. There was a search operation on 18th September, 1972 in the business premises of the assessee. The Asstt. Director submitted a report under s. 133A of the Act after carrying out the inspection. The report would go to show that one of the partners of the assessee - firm Shri V. Gopalaswamy was present at the time of inspection. In addition to the business premises Shri V. Gopalaswamy took the inspecting party to the residential portion voluntarily and showed the various cupboards, bureaus, almirahs, etc. The report would go to show that one of the partners of the assessee - firm Shri V. Gopalaswamy was present at the time of inspection. In addition to the business premises Shri V. Gopalaswamy took the inspecting party to the residential portion voluntarily and showed the various cupboards, bureaus, almirahs, etc. On 29th September, 1972 the assessee approached the CIT with a settlement application under s. 271(4) stating that the assessee had been lending monies on pronotes, discounting of cheques and mortgage loans and no accounts have been maintained for the said business. The assessee made an offer voluntarily for assessment of a total sum of Rs. 4 lakhs to be spread over in the different assessment years from 1967-68 to 1973-74. Thereafter, the ITO completed the assessments by spreading over the income of Rs. 4 lakhs offered for the abovesaid four assessment years. In making such additions, the ITO has stated in the assessment order relating to the asst. yr. 1970-71 that in the absence of strict proof as to the year to which the moneylending transactions relate, the income from moneylending during the relevant accounting year will be estimated at Rs. 85, 000, being the average for four years. 4. In order to levy penalty under s. 271(1)(c) , the ITO referred the matter to the IAC. Before the IAC the assessee submitted that since the fact that the assessee had been carrying on moneylending business had been brought to the notice of the Department voluntarily by the assessee and as the assessee had furnished details thereof, the question of ITO discovering that the assessee concealed the particulars of income did not arise and therefore, no penalty should be imposed. However, the IAC held that the materials seized at the time of the search on 18th September, 1972 proved that the assessee was not showing the income earned in moneylending business and that it was only after the search that the assessee had come forward with settlement petition and that, therefore, the plea that the disclosure of moneylending business and income thereon was voluntary, cannot be accepted. Accordingly, the IAC levied penalties of Rs. 85, 000, Rs. 85, 000, Rs. 1, 51, 400 and Rs. 77, 900 respectively, for these four assessment years under consideration. 5. Aggrieved, the assessee filed appeals before the Tribunal. Accordingly, the IAC levied penalties of Rs. 85, 000, Rs. 85, 000, Rs. 1, 51, 400 and Rs. 77, 900 respectively, for these four assessment years under consideration. 5. Aggrieved, the assessee filed appeals before the Tribunal. The Tribunal accepted the explanation offered by the assessee and deleted the penalties levied by the IAC in all the assessment years of consideration. The Tribunal pointed out that in as much as the returned income is not less than 80 per cent of the assessed income, Expln. 1 to s. 271(1)(c) will not be applicable to the facts of this case. 6. The learned standing counsel appearing for the Department submitted that the Tribunal was not correct in holding that Expln. 1 to s. 271(1)(c) will not be applicable to the facts of this case. The learned standing counsel pointed out that while considering the difference between the returned income and the assessed income, we have to take into consideration the entire total income returned by the assessee from all sources and the entire total income assessed by the ITO from all sources and the returned income is less than 80 per cent of the assessed income, then Explanation to s. 271(1)(c) prevalent during the relevant point of time would be made applicable and the burden of proving that there is no concealment would be placed upon the assessee. In the present case, the Tribunal took into consideration only the income returned from the source of moneylending business for the purpose of ascertaining whether the returned income is less than 80 per cent of the assessed income, instead of taking into consideration the entire total income returned by the assessee from all the sources and the entire total income determined by the ITO from all the sources. Since this approach was not made, the learned standing counsel submitted that the Tribunal was not correct in holding that Expln. 1 to s. 271(1)(c) will not be applicable to the facts of this case. In order to support this contention, reliance was placed on a decision of the Allahabad High Court in the case of Addl. CIT vs. Hari Sah 1980 (124) ITR 769 (All) : TC 50R.844. 7. The learned standing counsel further submitted that in the original returns filed by the assessee for the assessment years under consideration, the income from the moneylending business was not disclosed. CIT vs. Hari Sah 1980 (124) ITR 769 (All) : TC 50R.844. 7. The learned standing counsel further submitted that in the original returns filed by the assessee for the assessment years under consideration, the income from the moneylending business was not disclosed. The assessee came forward with the settlement petition only after the search was conducted and concealment was found out with regard to the moneylending income. Therefore, according to the learned counsel there is concealment of income in the returns filed by the assessee and the burden is on the assessee to prove that there is no concealment in not disclosing the income arising from moneylending business. According to the learned counsel, the assessee has not discharged the burden placed on it. Therefore, the Tribunal was not correct in cancelling the penalty levied under s. 271(1)(c) of the Act for the assessment year under consideration. 8. On the other hand, the submissions of the assessee were as under: The senior official like the Addl. Director of Inspection had been satisfied that the entire disclosure was voluntary and if this is read with the assessment order, it is clear that the assessee itself has disclosed information about the moneylending transaction over the period of years. The inspection was on 18th September, 1972 and the inspection report did not reveal any material with regard to the moneylending business. Therefore, the letter dt. 29th September, 1972 addressed to the CIT was an application given voluntarily, giving information referring income from moneylending business. The provisions of the IT Act should be administered reasonably and not to the detriment of the assessee unless there was wilful or deliberate concealment or evasion practised by the traders. 9. In the present case, it would be clear from the tenor of the inspection report as well as the order of the ITO that the whole matter was a voluntary disclosure on the part of the assessee. But for the letter dt. 29th September, 1972, to the CIT, the Department had no knowledge about the moneylending business. The IAC's satisfaction was based on the fact that it was a search that brought about the disclosure, which fact is clearly proved to be false. In the inspection report, it was clearly pointed out that no materials relating to the moneylending business was found out. This fact was admitted even by the learned Departmental Representative. The IAC's satisfaction was based on the fact that it was a search that brought about the disclosure, which fact is clearly proved to be false. In the inspection report, it was clearly pointed out that no materials relating to the moneylending business was found out. This fact was admitted even by the learned Departmental Representative. It was pointed out that information came from the assessee without any suggestion or detection by the Department. It was further contended that for the asst. yr. 1970-71 the total income without inclusion of Rs. 85, 000 would be Rs. 4, 82, 664 and in that case it cannot be said that the difference between the assessed income and the returned income exceeded the limit for bringing into operation the Expln. to s. 271(1)(c). It was also submitted that the Explanation would arise only when the substratum for concealment exceeds. According to the assessee, the Explanation does not operate automatically when there is difference between returned income and the assessed income, unless such difference really represents concealment of income. There was a notice under s. 142(3) fixing the date of hearing on 7th October, 1972 of the case long after the assessee's petition to CIT. This would go to show that no enquiry was made with reference to the return made and no question was asked by the ITO as to the basis he is going to adopt for distributing the total income of Rs. 4 lakhs for determining the income for the respective assessment years. Even otherwise, the assessee submitted that on merits also it was established that the burden placed upon the assessee in view of Expln. to s. 271(1)(c) of the Act stood discharged. It was further submitted that absence of proof acceptable to the Department cannot be equated with fraud or wilful neglect. 10. It remains to be seen that the assessee filed his return for the assessment years under consideration. In the returns filed by the assessee, the income relating to the moneylending business was not disclosed. Before completing the assessment for the asst. yr. 1970-71, there was an inspection on 18th September, 1972 in the business premises of the assessee. One of the partners of the firm, one Shri Gopalaswamy, who was present at the time of inspection, took the inspecting officers to the residence of the assessee and voluntarily showed various cupboards, bureaus, almirahs, etc. Before completing the assessment for the asst. yr. 1970-71, there was an inspection on 18th September, 1972 in the business premises of the assessee. One of the partners of the firm, one Shri Gopalaswamy, who was present at the time of inspection, took the inspecting officers to the residence of the assessee and voluntarily showed various cupboards, bureaus, almirahs, etc. The actual cash found in the premises tallied with the cash as per the books. Thereafter, on 29th September, 1972 the assessee approached the CIT with a settlement application under s. 271(4)(A) stating that the assessee had been lending monies on pronotes, discounting of cheques and mortgage loans and no accounts have been maintained for the said business and that these transactions have not been accounted for in its regular accounts for his lungi business. The assessee also mentioned that it offers voluntarily for assessment on an aggregate sum of Rs. 4 lakhs to be spread over and assessed in different assessment years from 1967-68 to 1973-74. On 22nd March, 1973, the assessment has been made as a registered firm. According to the assessee, they have disclosed the information about the moneylending transaction for the asst. yrs. 1967-68 to 1973-74 and have furnished details thereof and that the matter having been brought to the notice of the ITO before the assessment was made, s. 271(1)(c) or the Explanation thereunder would not be attracted. The inspection was made on 18th September, 1972 and the inspection report did not reveal any material with regard to the moneylending business. There was a letter dt. 29th September, 1972 addressed to the CIT voluntarily giving information regarding income from moneylending business. A plain reading of the assessment order and the inspection report would go to show that the whole matter was a voluntary disclosure on the part of the assessee. Till the letter dt. 29th September, 1972, the Department had no knowledge about the moneylending business. In the inspection report it was stated that the partner Shri Gopalaswamy voluntarily took the Asstt. Director of Inspection to the residential portion and the other places of business. Even the Departmental Representative fairly admitted that no material was found which would given an idea to the Department that there was moneylending business. It was also admitted by the Department that the information came from the assessee without any suggestion or detection from the Department. Director of Inspection to the residential portion and the other places of business. Even the Departmental Representative fairly admitted that no material was found which would given an idea to the Department that there was moneylending business. It was also admitted by the Department that the information came from the assessee without any suggestion or detection from the Department. A notice under s. 142(3) was issued fixing the date of hearing on 7th October, 1972 which is long after the settlement petition to the CIT. This would show that no enquiry was made with reference to the return filed and no question was asked by the ITO as to the basis he is going to adopt for distributing the total income of Rs. 4 lakhs for determining the income for the respective assessment years. According to the assessee the income offered under the moneylending business is within the limit provided under the Expln. to s. 271(1) (c). Further, it was pointed out that the Explanation would apply only when the substratum for concealment exists. It remains to be seen that the operation of Expln. to s. 271(1) (c) is not automatic. The Explanation was acting as a rule of evidence. Simply because there is an arithmetical difference between the returned income and the assessed income, penalty under s. 271(1) (c) is not warranted. It is always open to the assessee to prove that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. In the present case, the ITO did not detect any concealment while completing the assessment. So also the inspection report does not reveal that the inspection party has found out any concealed income from the moneylending business. The Department came to know the income from the moneylending business only after it was disclosed by the assessee. Therefore, on facts, the assessee established that the failure to return the correct income did not arise from any fraud or any gross or wilful neglect on his part. Further, in a given case, whether there is any concealment of income or not depends upon the facts arising in that case. On appraising the facts, the Tribunal came to conclusion hat there was no concealment of income regarding the moneylending business. Further, in a given case, whether there is any concealment of income or not depends upon the facts arising in that case. On appraising the facts, the Tribunal came to conclusion hat there was no concealment of income regarding the moneylending business. We point out that the conclusion arrived at by the Tribunal that there is no concealment of income on the part of the assessee with regard to the moneylending business, is based upon proper and valid materials. Therefore, we consider that there is no infirmity in the order passed by the Tribunal, while cancelling the penalty levied under s. 271(1) (c) for the assessment year under consideration. 11. The Tribunal pointed out that the returned income with regard to the moneylending business is more than 80 per cent of the assessed income under this head. Therefore, Expln. to s. 271(1) (c) will not be applicable to the facts of this case. It was pointed out by the learned standing counsel that in order to find out the difference between the assessed income and the returned income, the entire total income returned from all sources and the entire total assessed income from all sources should be taken into consideration. To support this contention, attention was drawn to a decision of the Allahabad High Court reported in Addl. CIT vs. Hari Sah (supra). In the abovesaid decision the Allahabad High Court, while considering Expln. to s. 271(1) (c), held "that as the difference between the total income returned and the total income assessed was more than 20 per cent, the assessee was liable to penalty. The fact that an assessee might be found to be grossly or wilfully negligent in declaring the correct income from one or more out of the several sources of income may have a bearing on the quantum of penalty that the authority may think fit to levy, but it had no relevance so far as liability to penalty was concerned". In view of the abovesaid decision, we have to hold that the Tribunal was not correct in stating that Expln to s. 271(1) (c) is not applicable to the facts of this case. However, it is significant to note that in the case of Addl. In view of the abovesaid decision, we have to hold that the Tribunal was not correct in stating that Expln to s. 271(1) (c) is not applicable to the facts of this case. However, it is significant to note that in the case of Addl. CIT vs. Jeevan Lal 1994 (205) ITR 244, 1995 (S4) SCC 247, 1994 (117) CTR 130, 1994 (73) TAXMAN 182, 1994 (117) CTR(SC) 130 (SC) while considering the provisions under s. 271(1) (c) of the Act, the Supreme Court held that the rule regarding burden of proof enunciated in CIT vs. Anwar Ali & Anr. 1970 (76) ITR 696, 1970 AIR(SC) 1782, 1970 (2) SCC 185 , 1971 (1) SCR 446 , 1970 UPTC 594 (SC) is no longer good law. Even if Explanation to s. 271(1) (c) is made applicable to the facts of this case, the explanation offered by the assessee would go to show that the assessee discharged the burden placed upon it. Thus, in as much as on merits, there was no evidence on the side of the Department to show that the assessee was grossly and wilfully negligent in declaring the correct income, we hold that the Tribunal was correct in deleting the penalty levied under s. 271(1) (c) of the Act. 12. Accordingly we answer the questions referred to us in the affirmative and against the Department. There will be no order as to costs.