dispute in this appeal, relates to assessee's liability for penalty under s. 271(1)(c) of IT Act. return in this case was filed for Rs. 35,378 and assessment was made on Rs. 51,780. assessee was not having any list of closing stock. Therefore, according to ITO, it could not be verified as to whether all purchases have been accounted for towards sale or closing stock. ITO during scrutiny noticed that purchases of assessee from 26th Feb., till end of accounting year were around Rs. 70,000 and sales during that period were around Rs. 20,000. closing stock had been declared are Rs. 44,983. Even if it was presumed that there was no opening stock, closing stock should have been valued at around Rs. 54,000. assessee could not explain this discrepancy and ultimately agreed for addition of Rs. 16,000. On this basis, ITO initiated penalty proceedings under s. 271(1)(c) of Act and issued show cause notice. assessee's plea was that assessee had agreed to addition to end litigation. He was illiterate person and was not conversant of repercussion of his admission in relation to liability for penalty. ITO, however, was of opinion that addition had been agreed to by assessee after detection of concealment. No assurance was given to him that penalty proceedings would not be initiated. Further, both assessee and his representative had signed order-sheet entry and had accepted addition. contention of t h e assessee that concealment has not been established had no force, because order-sheet entry made position clear that discrepancy had been found in books of assessee, which could not be explained. In fact, assessee's plea at that time was that goods worth Rs. 27,279 were purchased prior to Jan., 1980, but bill was received in March, 1980, but assessee was unable to prove this contention. Vide Letter dt. 9th Dec., 1982, assessee was asked to produce books of account, relating to period relevant for assessment year under consideration which again assessee failed to do for reasons best known to him. ITO, therefore, concluded that assessee had been guilty for concealment and levied penalty of Rs. 7,894. said penalty was knocked out by AAC on appeal by assessee. Revenue has made second appeal before Tribunal. We have heard representatives of parties at length and have gone through record carefully. main contention raised on behalf of Revenue was that addition in question has been accepted by assessee when he had been cornered and could not explain discrepancy in his account books. plea of assessee that he had purchased goods worth Rs.27,279 prior to Jan., 1980, but bill thereof was actually received by him in March, 1980, had been found to be without substance, therefore, concealment had been proved beyond doubt. After carefully considering all facts and circumstances we are of opinion that there is no substance in this contention. It is not that in every case of agreed addition, there is necessarily concealment. For instance, in Sohiner Singh and Bros. vs. CIT, Amritsar (1979) 9 CTR (P&H) 23: (1980)121 ITR 834 (P&H), assessee had been asked to explain as to how overdraft had been obtained against security of stock, while no such stock had been shown in books of account. explanation offered by assessee did not find favour with ITO, but in order to avoid litigation assessee agreed to addition of Rs. 23,054 to his total income. ITO initiated penalty proceedings and penalty had been upheld by Tribunal. On reference, it was held that: "Under s. 271(1)(c) of Act, penalty could not be leived on addition of amount of Rs. 23,054 in total income agreed to by assessee for purposes of tax only, unless there was material on record to show that such amount was income of assessee. Admittedly, there was no independent finding by IT Authorities to effect that amount of Rs. 23,054 was income of assessee under s. 271(1)(c) of Act." Similarly, in CIT vs. Punjab Tyres (1986) 56 CTR (MP) 7: (1986) 162 ITR 517 (MP), it was held that in cases of agreed addition to total income on account o f unexplained investments, Department had to prove by independent evidence in addition to evidence already brought on record, that amount added to income of assessee represented its concealed income, during relevant accounting year. In this case certain additions on account of unexplained investments were held to be insufficient to levy penalty. Coming to facts of this case, before AAC, it had been argued that assessee had agreed to addition to purchase peace and at time of assessment, ITO had assured that no penalty for concealment of income assessment, ITO had assured that no penalty for concealment of income would be levied, otherwise assessee would never have agreed to addition. ITO had not been able to substantiate addition by pointing out any unexplained instance of sale or purchase. addition had been made on surmises and conjectures only and there was nothing to show that addition in question constituted concealed income of assessee and apart from absence of proof of explanation given by assessee, Department had no cogent reasons of evidence on which it could be inferred that assessee had consciously concealed particulars thereof. AAC appears to have accepted all these contentions. only point made out by representative of assessee, that in fact he had purchased goods to tune of Rs. 27,279 earlier, which had been received in last week of March, 1980, had been accepted without any reason. This might have been done by AAC for insufficient reason, but it does not follow that this explanation was necessarily false. When we looked into assessment file to find out circumstances under which discrepancy in books of account had been deleted and assessee had agreed to addition in question, we found that there was absolutely no material to justify that discrepancy in books was due to any fraud, gross or wilful neglect on part of assessee within meaning of term as contemplated by earlier Explanation to s. 271(1)(c) of IT Act. It appears to be simple case of failure to substantiate bona fide explanation Rather, office note underneath assessment order of ITO concerned, reads as under: Office Note: "As assessee was not having list of closing stock, therefore, trading a/c addition as worked out above resulted in gross profit of around 18 per cent. Normally cloth dealers do not earn this much profit and as assessee was not having proper accounts, therefore, addition was agreed on this figure. assessee was almost blind from one eye due to motia. He was also otherwise very simple and was very unhappy in his personal life. His wife had expired during this relevant previous year. His adopted son was not well behaved towards him and his health was also shattered. All these factors also weighed heavily with me while agreeing to above addition of Rs. 16,000." perusal thereof would clearly show that far from it being his concealed income, addition itself had been accepted by assessee due to his illiteracy and had he not done so, addition itself might have been knocked off. In these circumstances, we are of opinion that there is no force in this appeal, which is hereby dismissed. In result, appeal is dismissed. *** INCOME TAX OFFICER v. SHASHI BHUSHAN, L/H OF TEJ BHAN (DECEASED)