Concealment penalty requires actual concealment, not just disallowance of a deduction claim under income-tax law.

Penalty for concealment under section 271(1)(c) cannot be sustained merely because a deduction claim is disallowed. The Tribunal found, on the material on record, that the assessee's claim for deduction of interest on loans did not amount to concealment of income, and that rejection of the claim alone was insufficient to justify penalty. On that basis, the cancellation of penalty was upheld and the reference was answered against the Revenue.

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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, for the assessment year 1969-70.

Analysis: The reference arose from a penalty imposed on the footing that the assessee's claim for deduction of interest on loans was not admissible and, therefore, amounted to concealment of income. The Tribunal, on appreciation of the material on record, found that the case did not involve concealment of income. The mere rejection of the deduction claim did not, by itself, establish concealment so as to sustain penalty under section 271(1)(c).

Conclusion: The Tribunal was justified in cancelling the penalty. The question was answered in the affirmative and against the Revenue.

Ratio Decidendi: Penalty for concealment cannot be sustained merely because a deduction claim is disallowed; a finding of concealment on the material on record is necessary.

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