Concealment penalty cancelled where prevailing understanding of minors' income provision and separate assessment negatived intent to conceal.

Penalty for concealment under section 271(1)(c) was cancelled because the Tribunal accepted the assessee's explanation that, at the relevant time, there was a common understanding that minors' income admitted to partnership benefits, earned before 1 October 1975, was not required to be included under section 64(1)(iii). The Tribunal also noted that the minors' income was being assessed separately, which negatived any intention to conceal income. On these facts, no error of law was shown in cancelling the penalty, and the reference application was rejected.

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Issues: Whether the Tribunal was justified in cancelling the penalty imposed for concealment under section 271(1)(c) of the Income-tax Act in proceedings under section 256(2), and whether the assessee's explanation based on the then prevailing understanding of section 64(1)(iii) negatived concealment.

Analysis: The Tribunal had found that, at the relevant time, there was a common belief that the income of minors admitted to the benefits of partnership, earned prior to 1 October 1975, was not required to be included in the total income by reason of section 64(1)(iii). On that basis, the assessee's explanation was accepted. The Tribunal also found that the minors' income was being assessed separately, which negatived any intention to conceal income. In these circumstances, no error of law in the cancellation of penalty was shown.

Conclusion: The penalty cancellation was upheld and the reference application was rejected.

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