Penalty for alleged concealment rejected where disclosed income and two possible business-ownership views defeated section 271(1)(c) liability.

Penalty under section 271(1)(c) was not sustainable where the assessee had disclosed the income for the full year and the real dispute concerned whether the business was carried on as an individual concern up to 26 August 1967 or as a partnership from 1 April 1967. The partnership deed supported commencement from 1 April 1967, while the Revenue relied on alleged book interpolations to contend otherwise. Because the facts admitted two possible views, the mere possibility of assessment in the assessee's individual hands did not establish concealment of income. The cancellation of penalty was therefore justified, and no concealment was found.

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Issues: Whether the Tribunal was justified in cancelling the penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 on the footing that the assessee had concealed income.

Analysis: The assessee had disclosed the income for the entire year, and the dispute was whether the business was carried on as an individual concern up to 26 August 1967 or as a partnership from 1 April 1967. The partnership deed stated that the partnership commenced from 1 April 1967, while the Revenue relied on alleged interpolations in the books to contend that the partnership came into existence only on 26 August 1967. On these facts, the matter admitted of two possible views, and the mere possibility of assessment of income up to 26 August 1967 in the assessee's individual hands did not compel a conclusion that the assessee had concealed income.

Conclusion: The cancellation of penalty was justified, and no concealment within the meaning of section 271(1)(c) was established. The question was answered in favour of the assessee and against the Revenue.

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