Concealment penalty requires independent factual proof, while the governing statute turns on the assessment completion date.

Penalty proceedings for concealment are independent of assessment, so an estimate used in assessment is only evidentiary and not conclusive. Where the assessee disputes the basic figure said to have been concealed, the authority must verify that figure on the materials available in the penalty proceedings; without a clear finding on the correctness of the estimated cost of construction, the concealment penalty cannot rest on a complete foundation. The applicable penalty statute under the transition provisions depends on the date of completion of assessment: the 1961 Act applies where assessment was completed after 1 April 1962, while the 1922 Act applies where assessment was completed earlier. The penalty provisions were upheld as valid on that basis.

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Issues: (i) Whether the validity of the penalty could be sustained without a proper finding on the correct cost of construction, and whether the reference on the first question should be returned for fresh consideration. (ii) Whether the levy of penalty was legally maintainable under section 271(1)(c) of the Income-tax Act, 1961, for assessment year 1958-59 and under section 28(1)(c) of the Indian Income-tax Act, 1922, for assessment years 1959-60 and 1960-61.

Issue (i): Whether the validity of the penalty could be sustained without a proper finding on the correct cost of construction, and whether the reference on the first question should be returned for fresh consideration.

Analysis: Penalty proceedings are independent of assessment proceedings, and the findings in assessment are relevant but not conclusive. Where the assessee specifically disputes the basic figure said to have been concealed, the authority must examine that figure afresh on the materials available in the penalty proceedings. In the absence of a clear finding on the correctness of the estimated cost of construction, the foundation for a concealment penalty is incomplete. Since the record did not provide a proper basis for the estimate adopted, a fresh enquiry was necessary rather than an answer on the existing statement of case.

Conclusion: The reference on the first question was returned for de novo consideration and the penalty issue on that aspect was left to be re-examined by the Tribunal.

Issue (ii): Whether the levy of penalty was legally maintainable under section 271(1)(c) of the Income-tax Act, 1961, for assessment year 1958-59 and under section 28(1)(c) of the Indian Income-tax Act, 1922, for assessment years 1959-60 and 1960-61.

Analysis: Under the transition provisions, where the reassessment for 1958-59 was completed after 1 April 1962, penalty proceedings could validly be taken under the 1961 Act. For the other two years, the relevant assessments had been completed before 1 April 1962, so penalty proceedings could validly be taken under the 1922 Act. The legality of invoking the respective penalty provisions therefore depended on the date of completion of the assessment, not on any supposed illegality in the choice of the governing statute.

Conclusion: The levy of penalty under section 271(1)(c) of the Income-tax Act, 1961, for assessment year 1958-59 and under section 28(1)(c) of the Indian Income-tax Act, 1922, for assessment years 1959-60 and 1960-61 was upheld as valid.

Final Conclusion: The transition provisions governing penalty proceedings were applied according to the date of completion of assessment, while the merits of concealment required a fresh factual determination before the penalty could be finally sustained.

Ratio Decidendi: In penalty proceedings for concealment, the assessment finding is only evidentiary and not conclusive; the authority must independently establish the basis of concealment on the relevant materials, and the applicable penalty statute is determined by the date on which the assessment is completed under the statutory transition provision.

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