Section 271(1)(c) penalty can stand without wilful concealment when the assessee gives no substantiated explanation.

Penalty under Section 271(1)(c) is treated as a civil liability, and wilful concealment is not required where the assessee fails to give a credible, substantiated and bona fide explanation for a disallowance. On the facts discussed, the appellate findings showed that the assessee could not explain why the claimed expenditure was excessive or not allowable, so Explanation 1 to Section 271(1)(c) applied and the disallowed amount was treated as concealed income. The note states that the concealment penalty was therefore sustainable and the appeal failed.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was sustainable in the absence of a satisfactory explanation for the disallowance, and whether Explanation 1 applied on the facts found by the appellate authorities.

Analysis: The assessment proceedings culminated in concurrent findings that the assessee failed to offer any credible explanation as to why the expenditure claimed was excessive or not allowable in computing business income. The Court applied the principle that penalty under Section 271(1)(c) is a civil liability and that wilful concealment is not an essential ingredient. Once the assessee failed to substantiate the explanation for the added/disallowed amount, Explanation 1 to Section 271(1)(c) operated and the amount added in assessment was treated as income in respect of which particulars had been concealed.

Conclusion: The penalty was held to be valid and the appeal failed.

Ratio Decidendi: In penalty proceedings under Section 271(1)(c) of the Income-tax Act, 1961, once the assessee offers no substantiated and bona fide explanation for the addition or disallowance, Explanation 1 applies and the concealment penalty can be sustained as a civil liability without proof of wilful concealment.

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