Concealment penalty requires deliberate suppression, and a disclosed accounting entry with a bona fide explanation will not suffice.

Penalty for concealment of income under section 28(1)(c) was not justified because the assessee had disclosed the disputed Vellarmalai Estate entry in its books and consistently explained that the receipts and expenses were handled on behalf of a company to be formed. The revenue did not make effective further enquiry or prove that the explanation was false, nor that the books reflected a deceptive suppression of income. The court held that concealment requires deliberate and conscious suppression with mens rea, and a mere omission or mistaken accounting entry is insufficient. On the materials, the explanation appeared bona fide and was supported by the later transfer to the new company, so deliberate concealment was not proved.

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Issues: Whether penalty for concealment of income under section 28(1)(c) was justified on the facts, and whether the record supported a finding of deliberate concealment.

Analysis: The assessee had disclosed the Vellarmalai Estate entry in its books, placed relevant materials before the tax authorities, and consistently explained that the receipts and expenses were dealt with on behalf of a company to be formed. The revenue made no effective further enquiry into the disputed entry and did not show that the explanation was false or that the books reflected a deceptive or misleading suppression of income. Concealment requires more than mere omission and involves a deliberate act with an element of mens rea. On the materials, the entry appeared to have been made under a bona fide belief while the new company was being formed, and the transfer of the amount to the new company supported that explanation.

Conclusion: Penalty under section 28(1)(c) was not justified and deliberate concealment was not proved. The finding was in favour of the assessee.

Ratio Decidendi: Penalty for concealment cannot be sustained unless the revenue establishes a deliberate and conscious suppression of income and not merely an unsatisfactory explanation or a mistaken accounting entry disclosed in the books.

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