Burden under Explanation 1 to section 271(1)(c): assessee must rebut concealment presumption with a bona fide explanation.

Penalty under section 271(1)(c) of the Income-tax Act, 1961 was considered in light of Explanation 1, which creates a presumption of concealment and places the burden on the assessee to prove that the explanation offered for the addition is bona fide and correct. The Tribunal erred in deleting the penalty without properly applying this burden-shifting rule. The Assessing Officer's penalty order was therefore restored, and the deletion of penalty was held not justified.

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Issues: Whether the Tribunal was justified in deleting penalty under section 271(1)(c) of the Income-tax Act, 1961, and whether Explanation 1 thereto shifts the burden on the assessee to explain the addition and rebut the presumption of concealment.

Analysis: The penalty provision was examined with reference to Explanation 1, which creates a presumption against the assessee and requires the assessee to prove that the explanation offered is correct. The Tribunal's approach was found to be incorrect for not appreciating the effect of the Explanation in the proper perspective.

Conclusion: The deletion of penalty was not justified and the Assessing Officer's order restoring the penalty was upheld.

Final Conclusion: The appeal succeeded and the penalty order stood restored.

Ratio Decidendi: Under Explanation 1 to section 271(1)(c) of the Income-tax Act, 1961, the burden shifts to the assessee to rebut the presumption of concealment by establishing a bona fide and correct explanation.

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