Concealment penalty is sustainable where account entries support a reasonable inference of deliberate suppression despite an unconvincing explanation.

Penalty for concealment under section 28(1)(c) of the Income-tax Act, 1922 is attracted where the accounts and surrounding transactions justify a reasonable inference of deliberate suppression, even if the assessee's explanation is only disbelieved and not affirmatively disproved. Mere rejection of the explanation is not enough by itself, but where the entries are unintelligible and the explanation is improbable, the authority may infer that the amounts were recorded to conceal their true source. On the facts stated, the court upheld the penalty and answered the reference in favour of the Revenue.

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Issues: Whether the Tribunal was justified in holding that the assessee had deliberately concealed income or kept back particulars so as to attract section 28(1)(c) of the Income-tax Act, 1922.

Analysis: Penalty under section 28(1)(c) is attracted only when the Income-tax Officer is satisfied that the assessee has concealed particulars of income or deliberately furnished inaccurate particulars. Mere rejection of the assessee's explanation does not automatically establish concealment, but if the accounts are so unintelligible and the explanation so improbable that a reasonable inference of suppression can be drawn, the penalty provision applies. On the facts, the credits and later debits were recorded in a manner that did not show any genuine source from the assessee's disclosed trading transactions, and the explanation about sugar sales did not fit the account entries. The accounts themselves supported an inference that the sums came from a different source and were recorded to conceal the real source of the money.

Conclusion: The answer was against the assessee and the penalty under section 28(1)(c) was rightly held to be attracted.

Final Conclusion: The reference was answered in favour of the Revenue, and the assessee's challenge to the penalty failed.

Ratio Decidendi: Penalty for concealment is sustainable where the surrounding accounts and transactions justify a reasonable inference of deliberate suppression, even if the assessee's explanation is disbelieved rather than affirmatively disproved.

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