Hon'ble Kashi Nath Pandey,J. :- 1. This Income Tax Appeal under Section 260-A of the Income Tax Act, 1961, has been preferred on the following questions of law: - 1.Whether upon the fact and in the circumstances of the case, the Tribunal was justified in holding that the surrender of the amount of Rs. 2 lacs, which resulted due to the mistake of the Accountant in the books of account was a case of concealment of particular of income? 2.Whether upon the fact and in the circumstances of the case, the Tribunal was justified in holding that the surrender of Rs. 2 lacs by the appellant to be added to its income as extra profit was not bonafide and was not to purchase peace and avoid litigation? 3.Whether upon the fact and in the circumstances of the case, the department had discharged its burden to prove concealment? 4.Whether upon the fact and in the circumstances of the case, the Tribunal was justified in setting aside the order of the CIT (Appellate) deleting the penalty imposed under Section 271 (1) (c), on surmises and conjectures? 5.Whether upon the fact and in the circumstances of the case, surrendering the amount resulting due to the mistake of the Accountant to be added as extra profit can be termed as fraud, willful neglect and concealment within the meaning of Section 271 (1) (c) of the Act? 2. The assessee was a partnership concern with 14 partners pertaining to Banjara Community. They were engaged in the business of running rice mill. For the Assessment Year 1992-93, they disclosed turnover of Rs. 56,57,959/-, giving a net profit of Rs. 70,837/-. 3. During the course of examination of the account books, the A.O. found that a cash receipt of Rs. 2,000/- on 19.6.1991 and payment of Rs. 2,000/- on 20.6.1991 was not entered in the cash book and was not posted in the ledger; cash receipt of Rs. 1,00,250/- on 11.10.1991 by bank draft by M/s. Radhika Trading Company was entered in the cash book and was posted twice, once in the account of M/s. Radhika Trading Company and other in the account of M/s. Dinesh Chand Anuj Kumar, the Delhi based sister concern. The assessee could not explain the posting of the same amount at two places. On 21.11.1994, a letter was filed by the assessee to explain that Rs. The assessee could not explain the posting of the same amount at two places. On 21.11.1994, a letter was filed by the assessee to explain that Rs. 1,00,250/- received on 11.10.1991, was rightly posted in the account of M/s. Dinesh Chand Anuj Kumar. The A.O. found that an amount of Rs. 1,00,250/- was wonrgly posted in the account of M/s. Radhika Trading Company, and added it to the income of the assessee, after turning down the explanation that the posting was made in the account of M/s. Radhika Trading Company against the same receipt. and against the payment of Rs. 1 lakh made by them on 21.1.1992. In the bank account, no deposit of Rs. 1 lakh appeared on 21.1.1992. The A.O. observed that the assessee had fraudulently reduced the liability. 4. The A.O. further found that cash receipt of Rs. 88,000/- of M/s. Radhika Trading Company, paid on 11.10.1991, was not entered in the books of account of the assessee nor sale of Rs. 91,174.55 made to them on 9.12.1991 appeared in the accounts of M/s. Radhika Trading Company in the assessee's books. The assessee explained that the rice of Rs. 1,176.55 was sold, but the sale was cancelled and the goods were further sold to M/s. Radhika Trading Company These sales were wrongly posted in the account of M/s. Vishnu Traders, Delhi. 5. The A.O. found that there were double entries on different accounts in the ledger and observed, after making note of these entries that the maintenance of account books are totally unreliable. Looking into the net profit declared by other rice millers, which was at a higher rate, he proposed additions, totaling Rs. 2,20,912/-. On 24.11.1994, Sri Mohd. Ishtiaq, partner of the assessee gave in writing through a letter, surrendering the net profit of Rs. 2 lakhs to be added to the income, provided the claim of deductions under Section 80HH and 80I, are allowed from the total profit. The A.O. accepted the offer and added it to the income, calculating the profit at Rs. 2,20,912/-. After giving the benefit of deductions of Section 80HH and 80I, the total income was found at Rs. 1,74,338/-, in which, the shares of the 15 partners at the rate from 4% to 9%, was calculated. The profit share of the partners ranged between Rs. 7,514/- to Rs. 13,525/-. 2,20,912/-. After giving the benefit of deductions of Section 80HH and 80I, the total income was found at Rs. 1,74,338/-, in which, the shares of the 15 partners at the rate from 4% to 9%, was calculated. The profit share of the partners ranged between Rs. 7,514/- to Rs. 13,525/-. The A.O. also directed to issue notice under Section 271(1)(C) for concealment of entries. The CIT(A), found that the penalty leveled by the ITO is misconceived and cancelled the same on the following reasons: - 10. In appeal before the first appellate authority, the submissions made before the Assessing Officer were reiterated. It was contended that the assessee firm has 15 partners and all of them were uneducated having no knowledge of accounts. It was further contended that the partners were from the Banjara community. It was further contended that the Munim had committed certain mistakes while totaling up the various heads of expenses as well as various pages of account books and not recorded certain transactions for purchase and sale and if both are adjusted, there remains no difference. Similarly, it was contended that the valuation of the closing stock is defective and it does not call for imposition of penalty. Thus, on account of the fact that there was no intention on account of the partners, an amount of Rs. 2 lakhs was surrendered. It was further contended that the partners were so gullible that they did not file an appeal against the assessment order which proved their innocence. It was further contended that even if the addition was warranted for tax purposes, the addition would not justify the levy of penalty. Considering these submissions, the CIT (A) came to the following conclusion: - "3. I have carefully considered the submission of the counsel, I have further perused the facts as recorded by the A.O. in his penalty order. It is apparent that the mistake detected by the ITO is nothing but mistake of accountant and partners have no knowledge of the said mistakes, the partners had surrendered the said amount. They were so innocent that even appeal against the said addition was not filed when they believed in the oral assurance of the ITO. Certain expenses for purchasing etc. remained unrecorded and so were certain receipts of sales etc. If those were adjusted, there would be no concealment. They were so innocent that even appeal against the said addition was not filed when they believed in the oral assurance of the ITO. Certain expenses for purchasing etc. remained unrecorded and so were certain receipts of sales etc. If those were adjusted, there would be no concealment. Similarly, concealment penalty cannot be imposed on the facts of change of method of valuation of closing stock. In view of all above, I am convinced that the penalty levied by the ITO is misconceived. I accordingly cancel the same. The appeal is allowed." 6. In the appeal filed by the revenue, it was contended that since the assessee had himself surrendered Rs. 2 lakhs when he was confronted with irregularities and has not filed any appeal, the penal provisions under Section 271(1)(C), are attracted. Relying upon K.P. Madhusudan's case, reported in 251 ITR 99 (SC), the Tribunal allowed the appeal. 7. Sri Shakeel Ahmad, learned counsel for the appellant, submits that unless there is a malafide attempt of concealment, the penalty is not attracted. The assessee surrendered Rs. 2 lakhs after the explanation given by their counsel regarding discrepancy in the accounts, was not accepted. The additions were not by way of any concealment of income as an attempt to evade the tax. These were by way of bonafide mistakes which were sought to be explained, but since they were not accepted, the assessee bonafidely surrendered Rs. 2 lakhs and he did not file any appeal, in which circumstance, the provisions of Section 271(1)(C) were not attracted. The Tribunal erred in law in allowing the appeal. He has relied upon the judgement in CIT v. Suresh Chandra Mittal, reported in (2001) 251 ITR Pg. 9, in which it was held that where the department had not discharged the burden of proving concealment and had simply rested its conclusion on the act of voluntary surrender done by the assessee in good faith, the penalty could not be levied. Sri. Shakeel Ahmad has also relied upon Sir Shadilal Sugar and General Mills Ltd. and Another v. Commissioner of Income Tax, Delhi (1967) 168 ITR 703, in which in an almost similar circumstance, the assessee had agreed to the additions of his income and did not file any appeal, the Supreme Court held that the circumstances did not follow that the amount agreed to be added was concealed income. The Supreme Court observed that there may be many reasons for such admission, i.e. when the assessee realises the true position, it does not dispute certain disallowances, but that does not absolve the revenue from proving the mens rea of quasi-criminal offence. 8. Sri A.N. Mahajan appearing for the department, has relied upon the explanation of Section 271(1)(c) and the provisions of Section 271(6)(c) of the Income Tax Act, 1967. He submits that in U.O.I. and Others v. Dharmendra Textiles Processors and Others (2008) 306 ITR 277 (SC), it was held by the Supreme Court, disagreeing with the Dilip N Shroff's Case (2007) 8 SCALE 304 (SC), that the Explanations appended to Section 272(1)(c) of the Income Tax Act indicate the element of strict liability on the assessee for concealment or for giving inaccurate particulars while filing the return. The judgment in Dilip N Shroff's case (2007) 8 Scale 304 (SC), did not consider the effect and relevance of Section 276C of the Income Tax Act. The object behind the enactment of Section 272(1)(c) read with the Explanations, indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as is the case in the matter of prosecution under Section 276C of the Income Tax Act. 9. In the present case, the A.O. has not recorded any finding that the assessee willfully attempted to conceal the income. The entire accounts were placed before the A.O. who did not discover any incriminating material on the basis of which he could draw a conclusion that the assessee had deliberately concealed the income. During the course of assessment when the A.O. did not accept certain entries in the books of account on which the assessee voluntarily surrendered Rs. 2 lakhs. The appellate authority also considered the circumstances that the firm had 16 partners who were uneducated and belonged to Banjara Community. They were carrying on business in a partnership concern and did not have detailed knowledge of the accounts. They acted bonafidely in surrender of the amount of Rs. 2 lakhs which was recorded in their account books, but could not be sufficiently explained. This bonafide act could not be treated as concealment of particulars of income, or furnishing inaccurate particulars of income. 10. They acted bonafidely in surrender of the amount of Rs. 2 lakhs which was recorded in their account books, but could not be sufficiently explained. This bonafide act could not be treated as concealment of particulars of income, or furnishing inaccurate particulars of income. 10. In Dharmendra Textiles Processors, (supra), the Supreme Court considered the question of penalty under Section 11 AC of the Central Excise Act. In Chairman, SEBI vs. Sriram Mutual Funds (2006) 5 SCC 361 , the Supreme Court had considered the scheme of penalty in SEBI (Mutual Funds) Regulations, 1996. It was held that Dilip N Shroff vs. Joint CIT (2007) 8 SCALE 304 (SC), was not correctly decided, as in it, the Court lost sight of difference between Section 271 (1)(c) and Section 276 (c) (providing for prosecution), of the Income Tax Act. It was held that the object behind the enactment of Section 271 (1)(c) read with its Explanations indicate that the said section has been enacted to provide for a remedy for loss of revenue. The penalty under that provision is a civil liability. Wilful concealment is not an essential ingredient for attracting civil liability as in the case in the matter of prosecution under Section 276 C of the Income Tax Act. 11. Explanation 1 to Section 7(1)(c) is in two parts. Part (A) is attracted where a person fails to affer an explanation or an explanation is found by A.O. or CIT(A) to be false. PArt (B) is attracted when a person offers an explanation which he is not able to substantiate, and fails to prove that such explanation is bonafide and that all the facts relating to the same and material to the compulation of his total income, have been disclosed by him. 12. In the present case, Part (B) of Explanation 1 has been called to aid to impose penalty, without the explanation offered, and which was not accepted by the A.O., was not found to be lacking in bonafides. Further, there is no finding that all the facts and material to the computation of total income, were not disclosed. Explanation 2 to 5 are not applicable to the facts of the case. 13. In the circumstances, we decide the questions of law in favour of the assessee and against the revenue. The Income Tax Appeal is allowed and order of ITAT dated 29.10.2002 is set aside. 14. Explanation 2 to 5 are not applicable to the facts of the case. 13. In the circumstances, we decide the questions of law in favour of the assessee and against the revenue. The Income Tax Appeal is allowed and order of ITAT dated 29.10.2002 is set aside. 14. The proceedings of penalty, if they have been drawn, shall be dropped.