Penalty for concealment of income may be computed on tax finally assessed, not just the proved concealed amount

Where concealment of income or deliberate furnishing of inaccurate particulars is found, penalty under section 28(1)(c) of the Income-tax Act, 1922 is not confined to the exact amount specifically proved to have been suppressed. The penalty may be computed by reference to the tax assessed on the income finally determined, that is, the difference between the tax actually assessed and the tax that would have been payable if the return had been accepted as correct. The final assessment under section 23(3) provides the basis for calculating the penalty, and the authority is not restricted to the concealed amount alone.

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Issues: Whether, on a finding that the assessee concealed particulars of income, the penalty under section 28(1)(c) of the Income-tax Act could be levied only with reference to the amount actually concealed or with reference to the tax assessed on the income finally determined.

Analysis: The finding required for penalty under section 28(1)(c) is concealment of particulars of income or deliberate furnishing of inaccurate particulars. Once such concealment is found, the penalty is not confined to the exact amount proved to have been suppressed. The section permits penalty to be computed with reference to the difference between the tax actually assessed and the tax that would have been payable if the return had been accepted as correct. The assessment made under section 23(3), once final, furnishes the basis for the penalty, and the authority is not restricted to the amount of income specifically shown to have been concealed.

Conclusion: The question was answered in the affirmative. The levy of penalty was justified and was not limited to the amount of concealed income alone.

Ratio Decidendi: Where concealment of income or deliberate furnishing of inaccurate particulars is found, penalty under section 28(1)(c) of the Income-tax Act, 1922 is computable with reference to the tax on the income finally assessed, not merely the amount specifically proved to have been concealed.

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