Kapur, J.
1. The question in this case related to the justification and/or legality of the penalty sought to be levied by the revenue on the assessed in the assessment year 1952-53 (previous year ending March 31, 1952). The assessed enjoyed certain overdraft facilities from the United Commercial Bank and had furnished security for the same. Part of the said security was represented by three deposits of Rs. 10,000 each in the names of Lal Singh, Gobind Singh and Pishorilal. There was an additional security furnished, being a deposit of Rs. 10,000 standing in the name of one Faqir Chand but that was in the subsequent year and, thereforee, in the opinion of the Tribunal, had no relevance to the year in question. By the time the assessment proceedings were taken up, Pishorilal had died and was, thereforee, nto produced. The other two persons were, however, produced and deposed that they offered their deposits as security to enable the assessed to enjoy the overdraft facilities. The Income-tax Officer and the Appellate Assistant Commissioner came to the conclusion that the said three deposits represented undisclosed income of the assessed and, thereforee, taxed the same in his hands. The said amounts had been deposited by the deposit holders in November, 1951. The assessed then took an appeal before the Income-tax Appellate Tribunal. The Tribunal dealt with the statement of the depositors in its order dated 19th July, 1962. About Faqir Chand the Tribunal took the view that the person produced was different from the real depositor and observed :
' This by itself would nto only prove that this particular deposit was fictitious but would also render that the other deposits also were of a similar nature because (as we shall later mention) all the deposits were made as part of the same scheme. '
2. The Tribunal dismissed the appeal with the observation that the department had succeeded beyond reasonable doubt in establishing that the assessed itself brought in the security moneys in the shape of those fixed deposits in the names of various persons who were totally at its influence or were obliged.
3. It may be pointed out that the deposits were pledged over a year after the date of deposit. The inclusion of Rs. 30,000 in the hands of the assessed was, thereforee, upheld finally by the Tribunal in the appeal. The Income-tax Officer then initiated penalty proceedings and decided that there was a willful and deliberate concealment of particulars of the assessed's income.
4. He, thereforee, levied a penalty of Rs. 20,000. The Appellate Assistant Commissioner dismissed the assessed's appeal and the assessed took the matter up in appeal before the Tribunal. The Tribunal allowed the penalty appeal and held that, 'since metis read has nto been established by the department to warrant levy of penalty under Section 28(1)(c), we cancel the order levying penalty .....'. In the judgment, the Tribunal observed :
'Therefore, at best, the reason for the additions being made in regard to these deposits in the quantum assessment could at best amount to the assessed's Explanationn being nto satisfactory. We have gone through the Tribunal's order. We are sorry to say that there is no material in it to support its conclusion that the fixed deposits represented the secret moneys of the assessed-firm. No link has been established between the assessed's moneys and the deposits in question. A perusal of the said order makes it patent that the Explanationn offered by Faqir Chand which related to the next year has weighed very: much with the Members of the Tribunal when they came to the aforesaid conclusion. As we have observed earlier, the department has nto discharged its onus of proving the fault of the assessed in concealing its income.'
5. It is in these circumstances that the Tribunal referred the following question to this court under Section 66(1) of the Indian Income-tax Act, 1922 :
'Whether, on the facts and in the circumstances of the case, penalty is livable under Section 28(1)(c) of the Indian Income-tax Act, 1922 ?'
6. Mr. Kirpal, the learned counsel for the revenue, contended that on precisely the same evidence the Tribunal having come to the conclusion that the assessed had itself 'brought in the security moneys in the shape of those fixed deposits in the names of various persons who were totally at his influence or were obliged', there was no scope for the Tribunal to come to a different conclusion in the penalty proceedings. He further contended that the earlier decision of the Tribunal, even though nto rest judicata, had, in the circumstances of the case, a binding effect because no other evidence was produced by the assessed to rebut the presumption arising against it. Mr. Bajaj, the learned counsel for the assessed, on the other hand, said that penalty proceedings, being independent proceedings, it was open to the Tribunal to come to a different conclusion, or, in any case, to come to a conclusion that the revenue had failed to discharge the onus that the concealment was conscious or deliberate. Mr. Kirpal relied on Lal Chand Gopal Das v. Commissioner of Income-tax : [1963]48ITR324(All) , Haji Abdul Rahman, Abdul Qayum v. Commissioner of Income-tax : [1965]56ITR172(All) and Moman Ram Ram Kumari v. Commissioner of Income-tax : [1966]59ITR135(All) . In Lal Ghana's case : [1963]48ITR324(All) , it was held that :
'Whatever were the materials in the assessment proceedings are materials in the penalty proceedings also and, if they are sufficient to justify the finding in the assessment proceedings that the receipt was income, -there is no reason why they should nto be sufficient for the same finding in the penalty proceedings. Once it is found in the assessment proceedings that the receipt is income, it follows that there has been concealment of the correct particulars because the receipt has been described in the accounts as a deposit and nto as income. The law simply is that the finding in the assessment proceedings is nto rest judicata or conclusive in the penalty proceedings and the income-tax authorities cannto refuse, in the penalty proceedings, to consider any other materia that may be laid before them by the assessed to show that the finding arrived at in the assessment proceedings was erroneous and that the receipt was nto income. What the income-taxauthorities cannto do in the penalty proceedings is to refuse to hear the assessed and consider the additional materials produced by him or even to reconsider the materials already produced by him in the assessment proceedings. But there is nothing to prevent their holding that the materials produced in the assessment proceedings were sufficient to justify the finding of concealment of the particulars.'
7. In Haji Abdul Rahman's case : [1965]56ITR172(All) , the Allahabad High Court decided that a finding reached in the assessment proceedings is a relevant fact. In Moman Ram Ram Kumar's case [1960] 59 I.T.R. 135, which is again a judgment of the Allahabad High Cout, it was held that if an Explanationn offered by an assessed' was deliberately false it could justify imposition of penalty. Lal Chand's case : [1963]48ITR324(All) was approved.
8. I will now take up the decisions relied upon by Mr. Bajaj, the learned counsel for the assessed. In Commissioner of Income-tax, v. Gokuldas Harivall-abhdas, [1958] 34 I.T.R. 98, 104 the Bombay High Court held that :
'Whether the assessed has committed an offence or not, it is for the Tribunal to decide, nd the majority of the Tribunal having decided that he has nto committed an offence, the matter is concluded.'
9. Dealing with the legal position, Chagla C. J. held :
(1) the penalty proceedings being quasi-criminal proceedings, the department must establish that the receipt in question constituted income of the assessed ;
(2) merely because the particular Explanationn given by the assessed is found to be false it does nto necessarily attract penalty ;
(3) a decision given in assessment proceedings cannto possibly be binding on the authorities who try the assessed for an offence ; and
(4) it is open to the Income-tax Officer in the penalty proceedings to consider his own finding that the receipt constituted an income for the assessment year, but he is nto bound by that finding and if for instance, any other evidence is produced in the penalty proceedings, it would be open to him to come to a different conclusion.
10. It is nto necessary to elaborately discuss the other decisions relied upon by Mr. Bajaj.as his point of view is sufficiently represented by the above-quoted decision of the Bombay High Court in Gokuldas's case, [1958| 34 I.T.R 98. I may, however, mention that in Commissioner of Income-tax v. Anwar Ali : [1967]65ITR95(Cal) the Calcutta High Court held that :
(1) the assessment proceedings are nto binding on the income-tax authorities in proceedings under Section 28 of the Income-tax Act. It is true that materials disclosed in assessment proceedings can be taken into consideration but such materials do nto constitute rest judicata ; and
(2) in proceedings under Section 28(1)(c) the charge against the assessed is never that he gave a false Explanationn with the result that even if that Explanationn had been disbelieved in the assessment proceedings and the amount brought to tax that will nto be decisive of the matter in penalty proceedings and the department must establish that the receipt constituted income and that the assessed concealed the particulars of his income or deliberately furnished inaccurate particulars of such income.
11. It was observed :
'There are two ingredients in that offence. First, there is to be proved concealment of deliberate furnishing of inaccurate particulars. Secondly, it is to be proved that the concealment of deliberate inaccuracy is with regard to income. To my mind the principles laid down by Chagla C.J. in the case of Gokuldas Harivallabhdas correctly express the character of proceedings under Section 28(1)(c) of the Indian Income-tax Act.'
12. The Calcutta High Court approved the decision of the Gujarat High Court in Commissioner of Income-tax v. L.H. Vora : [1965]56ITR126(Guj) . Vora's case was mainly based on the decision of the Bombay High Court in Gokuldas Harivallkbhdas's case. It was held that it was for the revenue to establish that the assessed had committed defaults as set out in Section 28. Dealing with the question as to whether the revenue could rely on the findings arrived at during the assessment proceedings as prima facie proof that certain cash credits (as in that case) in the assessed's books were his income and then draw an inference of his guilt, observed :
'The proceedings being of a penal nature and the burden being upon the department, it would be but legitimate to say that mere falsity of an Explanationn given in assessment proceedings would nto necessarily mean that the disputed amount represented income and that, apart from that circumstance, there must be some additional material from which the Income-tax Officer has to satisfy himself whether the assessed was guilty of the charge against him under Section 28.
But that does nto mean that because an assessed chooses to give a false statement or declines to give any Explanationn, no penalty proceedings can ever be taken against him. The question whether an assessed is guilty of any of the defaults enumerated in Section 28 is always a question of fact and the question of guilt must depend upon the facts and circumstances of each case. If thereforee, there are additional circumstances or materials before the Income-tax Officer besides the Explanationn given by an assessed in the assessment proceedings, action under Section 28 would be possible, if such circumstances or materials and reasonable inferences drawn from them are sufficient in the view of the Income-tax Officer to establish default under Section 28.'
13. The principles that emerge from the aforesaid decisions relied upon by Mr. Bajaj may be summarised thus :
1. Though the findings arrived at in the assessment proceedings constitute relevant and admissible materials in penalty proceedings, yet they do nto operate as rest judicata as the considerations relevant in penalty proceedings are different from those in the assessment proceedings.
2. Merely disbelieving the assessed's Explanationn about the sources of certain amounts entered in his books that they did nto belong to him and taking the amounts in the hands of the assessed will nto per se justify an imposition of penalty. The department must do something more and establish that the amounts constituted the assessed's taxable income and he was guilty of defaults specified in Section 28.
3. Only conscious and deliberate concealment on the part of the assessed can attract penalty.
4. Each case has to be decided on its own facts bearing in mind the aforementioned principles.
14. With utmost respect, I find it difficult to concur with the opinion of the Allahabad High Court in Lal Chand's case : [1963]48ITR324(All) to the extent the decision records a departure from the abovementioned principles. In the case at hand, the Tribunal, while dealing with the penalty appeal, came to the conclusion that at best the reason for the additions being made in the quantum assessment was the unsatisfactory nature of the assessed's Explanationn. I have already extracted above the relevant passage from the Tribunal's order and the passage shows that the Tribunal approached the problem from the point of view that in the earlier decision the Tribunal was influenced by the unsatisfactory Explanationn of Faqir Chand's deposit, which deposit had no relevance in therelevant year. It is , possible that my decision on facts, may have been,different. It is equally possible that if I were sitting as a court of appeal Imay have come to the same conclusion. But the factual controversy is, notbefore me. What calls for my decision is whether the Tribunal could. onfacts come to the conclusion to which it did, I need say no more than thisthat the Tribunal's view on facts is a possible one, namely, that the moneyswere taxed in the hands of the assessed on the footing that his Explanationnwas nto correct. In this view, I must answer the question in the negativeand in favor of the assessed. In the circumstances of the case, however, Iwill leave the parties to bear their own costs.