Concealment penalty on unexplained stock discrepancy upheld where fresh appraisal in penalty proceedings showed no plausible explanation.

In penalty proceedings under the Income-tax Act, unexplained discrepancy between stock shown in the books and stock found on inspection can support a finding of conscious concealment where the assessee offers no plausible explanation. The material must be examined afresh in the penalty record, and the findings in the assessment proceedings are not conclusive by themselves. On that basis, the penalty under section 271(1)(c) was sustained and the reference was answered against the assessee.

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Issues: Whether the assessee had concealed particulars of income so as to attract penalty under section 271(1)(c) of the Income-tax Act, 1961, and whether the levy of penalty was justified.

Analysis: The reference arose from a penalty imposed on account of unexplained discrepancy between the stock shown in the books and the stock found on inspection. The Tribunal reappreciated the material independently in the penalty proceedings and found an unexplained excess of wheat stock. It further held that, in the absence of any plausible explanation, the circumstances established conscious concealment of income. The findings in the assessment proceedings were not treated as conclusive, and the penalty was sustained on the basis of the fresh appraisal of the penalty record.

Conclusion: The concealment was proved and the levy of penalty was upheld in favour of the Revenue.

Final Conclusion: The reference was answered against the assessee, and the penalty imposed under section 271(1)(c) stood sustained.

Ratio Decidendi: In penalty proceedings, the taxing authority must examine the material afresh, and an unexplained stock discrepancy supported by lack of a plausible explanation may justify a finding of conscious concealment of income under section 271(1)(c) of the Income-tax Act, 1961.

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