Deliberate under-estimation of known income can constitute concealment and justify penalty under the old income-tax law.

Deliberate under-estimation of known income can amount to concealment for penalty purposes under the old Income-tax law. The assessee, a bus operator, failed to produce accounts or other material called for, and the authorities found the returned income was not a bona fide estimate but a conscious understatement. A mere difference between returned and assessed income does not by itself defeat penalty where the assessee was in a position to know the real income and still returned a lower figure. Penalty was therefore justified, and the reference was answered against the assessee.

---

---

Issues: Whether penalty under section 28(1)(c) of the Indian Income-tax Act, 1922 was justified on the facts where the assessee, a bus operator, returned estimated income without maintaining or producing accounts and the taxing authorities found the returned income to be a deliberate under-estimate.

Analysis: The assessee was under a duty to file a true return. He did not produce the available material called for under section 22(4) and the Tribunal found that accounts were withheld. The return was not shown to be a bona fide estimate based on known facts; rather, the assessee adopted a method that did not reflect his real income, despite circumstances showing progressive increase in earning capacity and bus capacity. In such a case, a mere difference between the assessee's estimate and the assessed income does not preclude penalty. Where the assessee is in a position to know the real income but deliberately returns a lower figure, concealment can be inferred.

Conclusion: Penalty was justified. The conduct amounted to concealment of income and not merely to furnishing of inaccurate particulars.

Final Conclusion: The reference was answered against the assessee, holding that deliberate under-estimation of known income attracts penalty for concealment under the old income-tax law.

Ratio Decidendi: Where an assessee knowingly returns an income lower than the real income, and the lower figure is not a bona fide estimate but a deliberate under-estimate, the case falls within concealment of income for penalty purposes.

---