Concealment penalty requires independent proof; rejection of the assessee's explanation alone does not establish inaccurate particulars.

Penalty for concealment of income under section 28(1)(c) could not be sustained merely because the assessee's explanation for excess stock was rejected and the corresponding addition in assessment was upheld. In penalty proceedings, the issue had to be tested on a stricter footing because the burden lay on the department to independently prove concealment or furnishing of inaccurate particulars. The absence of further material showing that the amount represented concealed income was fatal to the penalty. Penalty was therefore not exigible, and cancellation of the penalty was upheld.

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Issues: Whether penalty for concealment of income under section 28(1)(c) was justified merely because the assessee's explanation for the excess stock was not accepted and the corresponding addition in assessment was sustained.

Analysis: The addition to income had been made because the assessee could not satisfactorily explain the source of funds for the excess stock pledged with the bank. For penalty, however, the matter had to be tested on a stricter footing, since proceedings under section 28(1)(c) are penal in nature and the burden lay on the department to establish concealment or deliberate furnishing of inaccurate particulars. The rejection of the assessee's explanation, without further material showing that the amount represented concealed income, was insufficient to sustain penalty.

Conclusion: Penalty was not exigible and the Tribunal was justified in cancelling it.

Ratio Decidendi: In penalty proceedings for concealment of income, the mere rejection of the assessee's explanation for an addition does not by itself prove concealment; the department must independently establish that the assessee concealed particulars of income or furnished inaccurate particulars thereof.

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