Concealment penalty is rebuttable where a genuine liability exists and Revenue cannot prove fraud or wilful neglect.

Penalty for concealment under section 271(1)(c) of the Income-tax Act is not automatic where surrounding facts show a real and admissible liability. The text explains that withdrawal of funds to meet an existing sales tax liability, and later recredit of the amount in the next accounting period, did not by itself prove fraud, gross neglect, wilful neglect, or concealment. It further notes that the Explanation to section 271(1)(c) can be rebutted where the assessee shows a genuine liability and the Revenue fails to establish the requisite culpable conduct. The stated result is that deemed concealment was not made out and penalty cancellation was justified.

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Issues: Whether the Tribunal was justified in cancelling the penalty under section 271(1)(c) of the Income-tax Act, 1961, and in holding that the assessee had discharged the onus under the Explanation to that provision.

Analysis: The assessee had withdrawn the amount to meet an existing sales tax liability on the relevant date. That liability was held to be a real and admissible deduction, and the mere fact that it was not immediately entered in the books did not by itself establish fraud, gross or wilful neglect, or concealment. The circumstances showed that the liability existed and the amount was later brought back and credited in the following accounting period.

Conclusion: The Tribunal was right in holding that neither concealment of income nor deemed concealment under the Explanation to section 271(1)(c) was established, and the cancellation of penalty was justified.

Ratio Decidendi: For penalty under section 271(1)(c) read with its Explanation, a real statutory liability and surrounding circumstances may rebut the presumption of concealment where the Revenue fails to establish fraud, gross neglect, or wilful neglect.

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