Penalty discretion under section 28(1)(c) upheld where limited concealment justified reducing the amount imposed.

Section 28(1)(c) of the Indian Income-tax Act, 1922 fixed only a maximum penalty, leaving the Tribunal discretion to determine a reasonable amount on the facts. Although the Tribunal's original basis for quantifying penalty was incorrect because penalty could not be confined merely to tax evaded on the concealed income, the extent of concealment ultimately established remained a relevant factor. On that footing, reduction of the penalty to Rs. 5,000 was held not to be improper or unjustified, and the reference was answered against the revenue.

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Issues: Whether the Tribunal was justified in reducing the penalty levied under section 28(1)(c) of the Indian Income-tax Act, 1922.

Analysis: The statutory provision fixes only the maximum limit of penalty. While the basis suggested by the Tribunal for quantifying the penalty was legally incorrect in light of the Supreme Court view that the penalty cannot be restricted merely to the tax evaded on the concealed income, the Tribunal still retained discretion to fix a reasonable penalty on the facts and circumstances. The limited concealment ultimately established, as against the larger additions made in the assessment, was a relevant circumstance supporting reduction.

Conclusion: The reduction of the penalty to Rs. 5,000 was not improper or unjustified, and the reference was answered against the revenue.

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