revenue has come up in appeal against order of Commissioner (Appeals) wherein he has cancelled penalty of Rs. 2,68,712 imposed by ITO under section 271(1) (c) of Income-tax Act, 1961 ('the Act'). 2. assessee is HUF. assessment year is 1963-64 and relevant previous year is financial year ended on 31-3-1963. 3. undisputed facts are: assessee submitted its return of income originally on 27-3-1965 declaring total income of Rs. 12,804. Thereafter, assessee filed revised return on 15-3-1966 wherein total income declared was of Rs. 12,144. ITO framed assessment on 30-8-1967 accepting income returned by assessee. sources of income shown were from property and interest. While scrutinising case of assessee for subsequent year, ITO came to know that assessee had sold immovable property in accounting year, relevant to assessment year under consideration in respect of which, according to him, capital gains was exigible to tax. He, accordingly, initiated proceedings under section 148 of Act, requiring assessee to file its return of income. 4. In compliance with notice issued under section 148 , assessee filed its return of income on 17-3-1972 showing therein total income of Rs. 13,067 in which additional interest income of Rs. 923 was also disclosed. On 10- 9-1975, ITO framed assessment on total income of Rs. 82,329 which included capital gains of Rs. 69,262 on account of sale of land amounting to Rs. 1,76,495. cost of acquisition of said land admeasuring 3,209 sq yds. was taken at Rs. 30 per sq. yd. as on 1-1-1954. assessee went up in appeal against said order of ITO. AAC, vide his order dated 5-10-1977, set aside assessment and directed ITO to frame assessment afresh. On 17-1-1979, ITO framed fresh assessment on total income of Rs. 1,46,499 which included capital gains of Rs. 1,33,432. main reason for assessing capital gains of Rs. 1,33,432 as against original figure of capital gains of Rs. 69,262 was that instead of taking value of said land at Rs. 30n per sq. yd. as on 1-1-1954, ITO adopted value on that date at Rs. 10 per sq. yd. assessee went up in appeal before Commissioner (Appeals) and contended that since land in question was agricultural land, no capital gains tax was attracted on sale of it. In this connection, reliance was placed on decision of Hon'ble Gujarat High Court in cases of CIT v. Manilal Somnath [1977] 106 ITR 917 and Gordhanbhai Kahandas Dalwadi v. CIT [1981] 127 ITR 664. After considering submissions made on behalf of t h e assessee, Commissioner (Appeals) deleted Rs. 1,33,432 being capital gains worked out by ITO from total income of assessee, vide his order dated 5-3-1983. Thereafter, revenue came up in appeal before Tribunal and submitted that Commissioner (Appeals) was not justified in deleting capital gains included in total income of assessee. Accordingly to revenue, land in question sold by assessee was non-agricultural land. Reliance was placed on decision of Hon'ble Gujarat High Court in case of CIT v. Sarifabibi Mohmed Ibrahim [1982] 136 ITR 621. assessee, on other hand, kly; argued that Commissioner (Appeals) was fully justified in holding that land in question was agricultural land. In this connection, reliance was placed on decision of Hon'ble Gujarat High Court in case of CIT v. Siddharth J. Desai [1983] 139 ITR 628, which was decided after decision in case of Sarifabibi Mohmed Ibrahim (supra). After discussing case law at great length, Tribunal held that land in question was non-agricultural land and, therefore, Commissioner (Appeals) was not justified in accepting submissions made on behalf of assessee. Tribunal, vide its order dated 17-8-1982 reversed order of Commissioner (Appeals) on this point. 5. On aforesaid facts, ITO initiated proceedings under section 274 /271(1) (c) of Act, and called upon assessee to show cause why penalty should not be imposed under section 271(1) (c) in respect of non- disclosure of capital gains on sale of land in question. assessee in its letter dated 15-2-1983 requested ITO to drop penalty proceedings, in following manner: "In reply to above, I have to state that I have not concealed particulars of income read with explanation and hence penalty proceedings are illegal and bad in law. are illegal and bad in law. I further submit that proceedings are time barred and as such should be dropped. Without prejudice to above, I have to state that issue under disputes as to whether land was agricultural or otherwise, was highly debatable and hence there was no mens rea in not including capital gain on sale of agricultural land as per our bona fide belief. In view of above facts, penal proceedings are not applicable and hence same be dropped." 6. ITO however, was not satisfied with assessee's explanation. He, therefore, vide his order dated 30-3-1983, imposed penalty of Rs. 2,68,712 with following remarks: "The submissions is not acceptable, It is true that question is debatable but at same time assessee was not prevented to show income. When department issued notices under section 148 then also no disclosure came from assessee. When ITO treated land as N. A. land then debate started. Further tax assessment of assessee and, therefore, it is very clear that there was mens rea in not disclosing capital gain. Had there been no mens rea assessee ought to have shown capital gain or transfer earlier or even in revised returns or even return under section 147(a). Nowhere and at no stage assessee has come forwarded for disclosing material facts necessary for assessment. In view of above I am satisfied that assessee had committed clear default of concealing particulars of his income which has attracted provisions of section 271(1) (c) of Income-tax Act read with Explanation." 7. Being aggrieved by order of ITO, assessee went up in appeal before Commissioner (Appeals) and attracted order of ITO on various grounds. One of submissions made before Commissioner (Appeals) was that even if Explanations to Section 271(1) (c) could be pressed into service b y ITO, scope of Explanations shall have to be examined. assessee took up stand that it was not that in every case where there is substantial difference between returned income and assessed income, penalty for concealment can be imposed straightway. In this connection, it was also submitted that assessee had not to prove his bona fide belief beyond t h e shadow of doubt. It was further urged that if assessee offers some explanation which prudent person considers reasonably probably then o n u s which casts on assessee by virtue of Explanation stands discharges by him and thereafter, it was for ITO to prove that assessee had acted in dishonest manner or was guilty of contumacious conduct. In this connection, reliance was placed on number of decisions of Hon'ble Gujarat High Court, Andhra Pradesh High Court and Madhya Pradesh High Court, mentioned in paragraph 2.6 of order of Commissioner (Appeals). 3. Commissioner (Appeals) cancelled penalty after discussing at great length submissions made on behalf of assessee. Since we are in full agreement with order of Commissioner (Appeals) on this issue, lit is necessary to reproduce below relevant portions thereof: "2.7 I have considered submissions of Shri Patel in some depth and I find considerable merit in same. Gujarat High Court in case of D. V. Patel & Co. v. CIT reported in 100 ITR 524 has explained scope of Explanation to section 271(1) (c) . In words of their Lord-ships: 'The Explanation to section 271(1) (c) adds to rigour of highly penal provision and must be construed in fair and reasonable manner. legal fiction enacted in Explanation can be displaced if assessee proves that failure to return correct income, that is total income assessed, did not arise from any fraud or gross or wilful neglect on his part. This burden is not of same nature as burden which rests on prosecution in criminal case where prosecution has to establish guilt of accused beyond reasonable doubt nor is it of same nature as burden which lies upon revenue in establishing that assessee has concealed particulars of his income. It is burden akin to that in civil case where determination is made on preponderance of probabilities. It is not necessary that any positive material should be produced by assessee in order to discharge burden by relying on material which is on record in penalty proceedings irrespective of whether it was produced by him or revenue. only question to which income-tax authority has to address itself is whether on material on record in penalty proceedings it can be said in preponderance of probabilities that failure to return total assessed income has arisen on account of fraud or gross or wilful neglect on part of assessee. All facts and circumstances commencing with filing of original return and ending with assessment may be taken as relevant for considering assessee's lilability to penalty.' In light of observations of Gujarat High Court one has to view whether on facts of instant case appellant Civil Appeal No. be said to have discharged its burden under Explanation to section 271(1) (c) o r not. fact in this regard are as under: appellant-HUF owned plot of land which it though was agricultural la n d . said plot was situated on Ashram Road and was sold to Educational Society of Ahmedabad. According to revenue records land in question was being shown as agricultural land. appellant was, therefore, under bona fide belief that even if no agricultural operations were being performed land in question was agricultural land because it was not put to any other use either. ITO was of view, that because agricultural operation had not been performed and land in question was lying fallow, nature and character of land was non-agricultural. He, accordingly, assessed land as non-agricultural and included capital gains arising as result of transfer of that land. When matter went to learned Commissioner (Appeals) he came to conclusion that facts of the conclusion that facts of instant case were on all fours with those of case decided by Gujarat High Court and reported in Gordhanbhai Kahandas Dalwadi v. CIT [1981] 127 ITR 664. This is what learned Commissioner (Appeals) wrote in his appellate order: 'In my view, facts of case of assessee appear to be exactly similar to that of case decided by Hon'ble Gujarat High Court, on which reliance has been placed by assessee. Merely because agricultural operations were not do land, it does not amount ceasing to be agricultural land. ITO's presumption that if has become non-agricultural land is preposterous and is not based upon any evidence whatsoever. I, therefore, delete addition made by ITO on this ground. assessee thus gets relief of Rs. 1,32,432.' department went in appeal to Tribunal and Tribunal vide its order dated 17-8-1982 allowed appeal of revenue after relying on decision of Gujarat High Court in case of CIT v. Sarifabibi Mohmmad Ibrahim [1982] 136 ITR 621. ITO while levying penalty, has not brought any new facts on record. His main contention is that appellant has not disclosed all facts in this case and if he wanted to claim exemption from capital gains, then he should have at least claimed such exemption in Part IV of return. 2.8 In my opinion, there is considerable weight in submission of learned counsel of appellant, viz., that it is highly debatable issue as to whether particular land is agricultural or non-agricultural. Gujarat High Court has given catena of decisions on this point. decision in case of Sarifabibi Mohmmad Ibrahim (supra) was rendered on 17-4-1981. decision in case of CIT v. Siddharth J. Desai [1983] 139 ITR 628 was given on 18th, 21st and 22nd September, 1981. There is another decision in case of Arundhati Balkrishna v. CIT [1982] 138 ITR 245 which was rendered on 14th and 17th August, 1981. Gujarat High Court has laid down certain broad tests for determination of issue as to whether particular land is agricultural or non-agricultural in character. This development has taken place in year 1981. present assessment relates to assessment year 1963-64. Tribunal has also discussed Gujarat High Court decision in case of Sarifabibi Mohmmad Ibrahim (supra) and then came to conclusion that, on facts of this case land in question was non-agricultural in character. Now point to be noted is that when appellant filed return in March 1965, whether it could be anticipated that Gujarat High court would lay down certain tests and matter would be examined in light of those tests and land in question would be held as non-agricultural. In my view, such anticipation or prediction would require exceptional power of clairvoyance on part of assessee. It is admitted position that in revenue records land had been shown as agricultural land. appellant was paying land land had been shown as agricultural land. appellant was paying land revenue in respect of that land as agricultural land. only thing is that agricultural operations were not being performed and land is that agricultural operations were not being performed and land was lying fallow. I have been given to understand that Tribunal's decision in case of appellant has not been accepted by appellant and matter is now before Gujarat High Court. Under above circumstances I hold that appellant cannot be charged with fraud or willful neglect in not disc losing capital gains on sale of land in question. appellant could reasonably entertain bona fide belief that land in question was agricultural in character and sale thereof d i d not attract capital gains. burden cast upon appellant by Explanation to section 271(1) (c) can be said to have been discharged by appellant. It was, therefore, for ITO to discharge onus of proving dishonest or contumacious conduct or mens rea on apart of appellant in not disclosing particulars with regard to sale of land in question. ITO has failed to prove any conscious concealment on part of appellant. In body of penalty order ITO accepts proposition that matter is debatable one when he says that 'it is true that questions debatable'. ITO's grievance appears to be that when department issued notice under section 148 even then appellant did not disclose facts of sale, etc., of land. According to him, it was very clear that 'there was mens rea in not disclosing capital gains'. ITO has further opined in penalty order that at no stage did assessee come forward opined in penalty order that at no stage did assessee come forward for 'disclosing material facts necessary for assessment.' 2.9 I have quoted extensively from ITO's order with view to highlighting his warped thinking. On other hand, he concedes that question as to whether land was agricultural or non-agricultural was 'debatable' one. On other hand,; he expected appellant to disclose capital gains in return. law does not enjoin on assessee to disclose all things whether relevant or irrelevant lin return of income. If assessee entertains genuine belief that particular receipt is not income then he need not make specific mention of it in exemption column in return. Non-disclosure of certain material facts may be relevant for reopening of assessment proceedilngs but that cannot be spring-board for charging assessee with concealment of income. 2.10 In view of foregoing discussion, I am satisfied that ITO has not been able to establish case of dishonest or contumacious conduct on part of appellant and so penalty order passed by him is not sustainable. I, therefore, Civil Appeal No. cel penalty of Rs. 2,68,712." 9. Being aggrieved by order of Commissioner (Appeals), revenue has come up in appeal before Tribunal. learned representative for department vehemently argued that Commissioner (Appeals) was not justified in cancelling penalty imposed by ITO under section 271(1) (c) . At outside, he was fair enough to state that he did not dispute fact that assessee was under bona fide belief that land in question was agricultural land and, therefore, no capital gains tax could be attracted on sale of same. However, accordingly to learned representative for department, assessee ought to have disclosed fact regarding sale of land in question for claiming exemption from capital gains in section F of return, which reads as under: "In this section should be shown any amount which is not included in section A, B and C, and which assessee claims to be not taxable for any reason such as that receipt is of casual nature not arising from any business or profession or occupation or that it is exempt under any other provision of Income-tax Act, 1961." In this connection, he invited our attention to original, revised and return filed in compliance with section 148 , and highlighted fact that in neither of those returns, assessee had cared to furnish details in section F of return. He, further submitted that by filing revised return on 15-3-1966 and not disclosing fact about sale of land in question in section F, assessee had attempted to mislead ITO. According to learned representative for department, thus. 'keeping department in dark', assessee had committed positive fraud and, therefore, was liable to be penalised under section 271(1) (c). He also invited our attention to verification of returns by Karta of assessee-HUF and urged that even though assessee was aware of fact of sale of land question, necessary particulars were not furnished in section F of return. He further submitted that since assessee was assisted by able chartered accountant, he cannot plead ignorance of law for not furnishing any information in section F of other return. He further submitted that since land in question was sold to non- agriculturists, it was not agricultural land land, therefore, assessee should not have avoided giving information in section F of return. Therefore, he invited our attention to order of Commissioner (Appeals) (reproduced above) and submitted that in order to impose penalty under section 271(1) (c) ITO has not to bring any fresh in penalty proceedings other than that already brought in quantum proceedings. He further submitted that in order to decide point at issue all facts and circumstances commencing with filling of original return and ending with assessment should be taken into account for considering whether assessee was liable to penalty under section 271(1) (C) - D. V. Patel & Co. v. CIT [1975] 100 ITR 524 (Guj.). In instant case, according to othe learned representative for department, if we were to keep in mind facts and circumstances commencing with filling of original return and ending with assessment, it is quite apparent that assessee's case clearly fell within mischief of section 271(1) (C) read with explanation thereto. He also submitted that assessee has not come forward with any explanation as to why he has not shown information regarding sale of land in question in section F of return. He also submitted that since assessee's 'plea' that land in question was agricultural land was not reflected in returns, there is clear gross or wilful negligence on part of assessee which would attract provisions of Explanation to section 271(1) (C ). He also invited our attention to sub-section (6) of section (6) of section 139 of Act, as it stands today and submitted that it was obligatory on part of assessee to furnish particulars of income exempt from tax. Further, he invited our attention to section 277 of Act, captioned 'False statement in verfication, etc.,' and submitted that assessee could have been penalised under that section for false verification in return. He also relied on decision of Hon'ble Patna High Court in case of CIT v. Patna Timber Works [1977] 106 ITR 452. He, therefore, urged that order of Commissioner (Appeals) should be set aside and that of ITO should be restored. 10. As we did not find any substance in any of submission made on behalf of revenue, we did not call upon learned counsel for assessee to make his submissions. However, learned counsel for assessee filed paper book containing orders of ITO, Commissioner (Appeals) and Tribunal in quantum proceedings, assessee's reply to show-cause notice issued under section 274/271(1) (C) and co py of th e statement of case dated 29-6-1983 in Reference Application No. 868 (Ahd.) of 1982 to point out that assessee has not accepted order of Tribunal in quantum proceedings and reference is pending before Hon'ble High Court. He also invited our attention to sub-section (6) of section 139 , as it stands today and pointed out that since said sub-section was inserted 1-4-1976, leanred representative for department ought not to have wasted time of Tribunal in manner he did. 11. We have carefully considered submissions made on behalf of revenue and we are constrained to observe that when point involved in appeal was simple one, revenue had unnecessary dragged matter for quite some time in Court. We make this observation as learned representative for departmental was fair enough to state in beginning that revenue is not disputing fact that assessee was under bona fide belief that land in question was agricultural land and, therefore, no capital gains tax could be attracted. In fact, Commissioner (Appeals) in his order (reproduced above) has also pointed out that ITO himself had no doubt in his mind that question regarding exigibility of capital gains tax was 'debatable'. It appears that ITO initated penalty proceedings and imposed penalty under section 271(1) (C), mainly on ground that assessee had failed to show in section F of return that he had sold land in question. In fact, as it would appear from above that entire line of argument of revenue before Tribunal was that penalty under section 271(1) (C), could be imposed on assessee for his failure to disclose fact about sale of land in question in section F of return. We are not prepared to accept stand taken on behalf of revenue, which is to say least, has no foundation whatsoever. We are dealing with penalty for concealing particulars of foundation whatsoever. We are dealing with penalty for concealing particulars of income or furnishing inaccurate particulars of such income by assessee. In instant case, stand of assessee all throughout quantum proceedings was that since land in question was agricultural land, no capital gains tax could be attracted. Further, this is not mere imagination of assessee but stant of assessee is clearly supported by some of decisions of Hon'ble Gujarat High Court. With this background in mind, can it be said that assessee could be penalised under section 271(1) (C) , merely on ground that he had failed to show particulars of sale of land in question in section F of return. We may mention here that during his course of argument, learned representative for department was fair enough to state that if assessee had shown fact about sale of land in question in section F of return, perhaps revenue would not have come in appeal against order of Commissioner (Appeals) deleting penalty imposed under section 271(1) (C) . We have already reproduced above relevant portion of order of Commissioner (Appeals) as we fully agree with conclusion arrived at by him. In fact, it is difficult to find any infirmity in order of Commissioner (Appeals) cancelling penalty imposed under section 271(1) (C) . We have, therefore, no hesitation in upholding his order under appeal. 12. In result, appeal is dismissed. *** INCOME TAX OFFICER v. H.A. SODHAN (GREATER-HUF)