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JUDGMENT Desai, J.-The question which arises for our determination on this reference is as under: "Whether the levy of Rs. 68,501 as penalty for concealment in the original return for the assessment year 1951-52 is legal?" The assessee firm is carrying on business in cloth at Surat and in the course of its business, it has been exporting cloth to its branch at Bangkok in Thailand. During war years, the business at Bangkok had been suspended but was restarted some time in June, 1948, after the assessee obtained export licence. The head office at Surat charged a commission of about 2 per cent. which was loaded on to the price shown in the invoices relating to the export of goods to the branch at Bangkok. That amount of 2 per cent. was shown by the assessee in its profit and loss account. The exports so accounted by the assessee in the income-tax proceedings relating to the previous years 1948, 1949 and 1950 were as under: Previous year Calendar year Assessment year Exports Commission added Rs. 1948 1949-50 2,00,000 (Approx.) 7,569 1949 1950-51 4,88,086 18,527 1950 I95I-52 7,50,000 (Approx.) 23,082 In its return for the assessment year 1949-50 the assessee did not include any profit of the Bangkok branch but made a declaration on the return filed by it as under: "The books of account of the Bangkok branch are not available at present. I have no objection in case the profits earned there are estimated subject to action under section 34 or 35 on production of statement of accounts." The Income-tax Officer completed the assessment estimating the profits of the branch at 5% on the prices shown in the invoices. For the assessment year 1950-1951 (C.Y. 1949) there was no reference to the Bangkok business in the return filed by the assessee. The Income-tax Officer did not accede to the plea of the assessee that the profits at Bangkok could not exceed 2 per cent. of the export value of the goods and estimated the profits once again on the basis of 5 per cent. of the export price of those goods. In respect of the assessment year 1951-52 (C.Y. 1950) also the assessee did not show the Bangkok business nor made any reference to the same in its return. That return was filed on…

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