Penalty for concealment requires positive proof; mere rejection of a cash-credit explanation does not sustain it.

Penalty under section 271(1)(c) cannot be sustained merely because an assessee's explanation for a cash credit is disbelieved or the related addition is made in assessment. In penalty proceedings, the Revenue must reach a reasonable and positive conclusion that the amount represents the assessee's income and that concealment is established; rejection of the explanation alone is insufficient. On that basis, the cancellation of the penalty was upheld and the issue was answered against the Revenue.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be sustained merely because the assessee's explanation regarding a cash credit was disbelieved and the addition was made in assessment.

Analysis: The Tribunal found that disbelief of the evidence regarding the alleged borrowing did not by itself establish concealment. The governing principle, as applied, is that in penalty proceedings the Revenue must reach a reasonable and positive conclusion that the amount represents the assessee's income; mere rejection of the explanation or confirmation of the addition is insufficient to justify penalty.

Conclusion: The question was answered in the affirmative and against the Revenue. The cancellation of the penalty was upheld.

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