assessee is aggrieved against levy of penalty under s. 271(1)(c) of Rs. 37,000 upheld by CIT(A) as against penalty of Rs. 50,000 levied by ITO. assessee was partner in M/s Darshan Trading Co. from which firm he declared share loss of Rs. 35,512. He had also small insurance commission income of Rs. 623. As against loss returned of Rs. 34,889. ITO assessed income at Rs. 12,306. This main addition made was of Rs. 37,000. was out o f deposits made by assessee in aforesaid firm. While part of deposits were accepted as genuine, ITO disbelieved deposits of Rs. 66,500 totalling Rs. 37,000. As difference between income returned and assessed income were more than 20 per cent, ITO levied under Expln. to s. 271(1)(c) penalty of Rs. 50,000. assessee's main ground before CIT(A) was that ITO had disbelieved his explanation in respect of different deposits and this was not sufficient ground for holding that assessee had concealed his income. CIT(A) rejected this contention on ground that this case fall under Expln. to s. 271(1)(c) and, therefore, onus was on assessee which he has not discharged. At hearing before us ld. Counsel for assessee urged that though ITO had treated Rs. 37,000 as assessee's income from undisclosed sources and assessee had not appealed against said assessment, this was due to fact that income assessed was only Rs. 12,300 on which there was nominal tax and assessee had earlier taken matter to AAC when ITO had made addition of Rs. 55,300 and AAC by order dt. 8th April, 1976 had set aside assessment and present assessment was made in consequence of said orders of AAC. assessee had claimed before AAC in 1976 that deposits in question in Darshan Trading Company were made out of withdrawals form Arti Traders and Linker Finance Chit Fund Pvt. Ltd. (Whose account books were seized by Dy. Director of intelligence, IT) and therefore, assessee should be given opportunity to examine said seized account books for explaining aforesaid deposits in Darshan Trading Co. assessee's contention before us is that despite said directions given by AAC in 1976, said account books of two firms were not made available to assessee for inspection so that he could explain source of deposits in Darshan Trading Company. Regarding individual deposits, assessee's contention were as under: Rs. 4,000 deposited on 13th June 1970 assessee had claimed that hs deposit was made out of easier withdrawals from Darshan Trading Company and as during that period assessee was unmarried and was leaving with his father, therefore, said withdrawals remained with him in cash and were available for redeposit subsequently. It is urged that CIT(A) was wrong giving assessee credit only for withdrawals of Rs. 1,000 during year under consideration and not for earlier years. It is urged that assessee's explanation on this point, therefore, was not proved to be false and assessee had discharged onus cast on him. Rs. 3,000 deposited on 16th Aug., 1970 was claimed to be withdrawn from Linkers Finance & Chit Fund Pvt. Ltd. This explanation was rejected on ground that assessee did not file any evidence. assessee grievance is that as according books of said company, were in possession of revenue and assessee was not given opportunity to inspect said company's account books, therefore, impossible burden was cast on assessee. Rs. 25,000 deposited on 3rd Oct., 1970 was claimed to be loan from Lakshmi Chand as per his confirmation, CIT(A) rejected assessee's contention on ground that Lakshmi Chand was not produced. Our attention was drawn to assessee s reply dt.. 11th March 1981 to penalty notice addressed to ITO in which it was stated that ITO making assessment did not ask assessee to produce Lakshmi Chand for examination except on last date of hearing when Lakshmi Chand was out of station. It is urged that despite this explanation, ITO in penalty proceeding did not summon Lakshmi Chand. Rs. 15,000 deposited on 16th Oct., 1978. ITO accepted explanation that Rs. 10,000 was available out bank withdrawal. ITO, however, rejected explanation regarding loan of Rs. 5,000 from assessee's father Prahallad Rai on ground that no evidence was produced. In aforesaid explanation before ITO dt. 11th March, 1981, assessee explained that loan raised from his father could not be treated as his income as assessee's source of income were salary and commission income since 1968- 69. It is stated that ITO in penalty proceedings did not ask for production of his father Parhlad Rai. It is urged that assessee had discharged his onus even under Expln. to s. 271(1)(c) and, therefore, no penalty was leviable. Reliance was placed on CIT vs. Narang & Co. (1974) 98 ITR 462 (Del) where is was held that No penalty under Expln. to s. 271(1)(c) was leviable where assessee can raise probabilities in his favour or point out circumstances which can create doubts, benefit of which can be given to him. Reliance was also placed on CIT vs. Vinay Chand Harilal (1979) 120 ITR 752 (Guj) where assessee had admitted before AAC that amount in question belonged to him. It was held that said admission does not amount t o admission that it was income of relevant year and, therefore, it was not sufficient for levy of penalty and revenue must established that amount in question was assessee income of relevant year and under circumstances, burden cast by Expln. to s. 271(1)(c) upon assessee must be held to be discharged. Reliance was also placed on CIT vs. Rudrappa & Co. (1984) 147 ITR 204 (Mad) where it was held in respect of cash credits that inability of assessee to explain cash credits and consequent addition of amount as assessable income does not justify levy of penalty under s. 271(1)(c). revenue relied on CIT vs. M. Habibullah (1982) 29 CTR (All) 281: (1982) 136 ITR 716 (All) where it was held that under Expln. to s. 271(1)(c) onus is on assessee and assessee is entitled to adduce further evidence penalty proceedings and in absence of fresh evidence, onus on assessee was not discharged and, that findings given in assessee proceedings are relevant and have probative value. In that case there were deposits in bank account of assessee and assessee had claimed source of deposit to be his son who in turn had ascribed source to one Mushi Raghunath Prasad who was employee of assessee himself and said employee was not produced before ITO because he had died in 1970. On those facts, High Court had upheld levy of penalty. Similar view was taken by Allahabad High Court Addl. CIT vs. Lakshmi Industries & Cold Storage Co. Ltd. (1984) 146 ITR 492 (All) where addition had been made on estimate on account of unexplained raw material of Rs. 50,000 and unexplained cash credits of Rs. 41,500 and assessee's returned income was less than 80 per cent of assessed income and on both Courts Allahabad High Court held that assumption of concealment was no rebutted by assessee as assessee had not offered any explanation with regard to Rs. 31,500 out of Rs. 41,500 added on account of cash credits and Tribunal had not record any finding that failure of assessee to return correct income was not due to fraud or gross or wilful negligence. facts in case before us are distinguishable from facts in two cases before Allahabad High Court (mentioned supra). We would respectfully follow Delhi High Court decision in Narang & Co. (supra) and hold that in circumstances of case assessee had discharged onus and no penalty under s. 271(1)(c) or Explanation thereto was leviable. In result, appeal is allowed. *** DAYAL DASS v. INCOME TAX OFFICER