Concealment penalty for unexplained gold jewellery was sustained when post-notice explanations lacked supporting evidence.

Gold jewellery found and seized during search was treated as unexplained investment where the assessee failed to disclose the source at the search stage and in the return filed in response to notice under section 153C. A later revised computation was filed only after notice under section 142(1), and the explanation based on VDIS, gifts and stridhan was rejected for lack of supporting evidence, including absence of wealth-tax returns. The explanation was treated as an afterthought, and the penalty principle was applied on the basis that concealment penalty does not require proof of mens rea. The penalty under section 271(1)(c) was sustained and the first appellate authority's deletion was set aside.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on the assessee in respect of the gold jewellery found during search and treated as unexplained investment.

Analysis: Gold jewellery was found and seized during search under section 132, but the assessee did not explain the source at the search stage or in the return filed in response to section 153C notice. The revised computation admitting the investment was filed only after notice under section 142(1). The explanation based on VDIS, gifts and stridhan was not accepted, as no wealth-tax returns were filed and no convincing evidence was produced to show that the jewellery was carried forward from disclosed sources. The explanation was treated as an afterthought. The penalty provision was applied on the footing that concealment need not be accompanied by proof of mens rea, and the facts were held to fall within the principle governing penalty for concealment.

Conclusion: The penalty under section 271(1)(c) was rightly sustained and the deletion by the first appellate authority was set aside.

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