Concealment penalty requires cogent proof; a bona fide explanation for an unregistered property advance defeated penalty.

Penalty under section 271(1)(c) is not justified where the assessee's receipt arose from an unregistered agreement to sell, no registered transfer deed was executed, and the transaction did not result in a legally completed transfer attracting capital gains. A bona fide explanation supported by affidavits and surrounding material cannot be rejected merely because the amount was later surrendered or was not originally disclosed. Concealment or furnishing of inaccurate particulars must be established on cogent material, and penalty proceedings cannot rest on suspicion alone. On these facts, the concealment penalty was held unsustainable and deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was justified on the facts where the assessee received earnest money under an unregistered agreement to sell, deposited the amount in bank, and later surrendered the sum during assessment proceedings.

Analysis: The material on record showed that the alleged transaction related to an unregistered agreement to sell, no registered transfer deed had come into existence, and the assessee had not been shown to have completed a transfer attracting capital gains in law. The explanation offered was supported by affidavits and supporting material indicating that the amount was received as advance in a property deal that could not mature. In these circumstances, the explanation could not be rejected merely because the amount was not originally disclosed. Penalty proceedings are not to be sustained on suspicion or on a bare surrender where the surrounding facts do not establish concealment of particulars of income or furnishing of inaccurate particulars.

Conclusion: The penalty under section 271(1)(c) was not sustainable and was deleted in favour of the assessee.

Ratio Decidendi: Penalty for concealment cannot be imposed unless the Revenue establishes, on cogent material, that the assessee concealed income or furnished inaccurate particulars; where the underlying transaction is not legally complete and the explanation is bona fide, penalty is not justified.

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