Penalty for concealment requires proof of guilty intent; omission to value closing stock was not enough here.

Omission to bring closing stock value into account was held not to constitute concealment of income or deliberate furnishing of inaccurate particulars for penalty purposes. Penalty under section 28(1)(c) of the Income-tax Act, 1922 is penal in character, so the revenue must prove the requisite guilty intent. On the facts, the assessee's hybrid accounting method, the early stage of the business, and the surrounding circumstances did not show a conscious attempt to suppress income. The revenue failed to discharge its burden, and the penalty was not legally sustainable.

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Issues: Whether the assessee's omission to bring the closing stock value into account amounted to concealment of income or deliberate furnishing of inaccurate particulars so as to attract penalty under section 28(1)(c) of the Income-tax Act, 1922.

Analysis: Penalty under section 28(1)(c) is penal in character, and the burden lies on the revenue to establish concealment of particulars of income or deliberate furnishing of inaccurate particulars. The assessee's books reflected a hybrid accounting method, the business was in its initial years, and the surrounding circumstances did not show a conscious attempt to suppress income. On the material before it, the revenue had not discharged the burden of proving the requisite guilty intent.

Conclusion: The omission to disclose the closing stock value did not amount to concealment or deliberate furnishing of inaccurate particulars, and the penalty was not legally sustainable. The answer was therefore in favour of the assessee.

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