Penalty for concealment requires proof of taxable income and deliberate inaccuracy; suspicion alone cannot sustain levy.

Penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, is penal in character and can be sustained only if the revenue proves that the disputed amount was the assessee's income and that there was concealment of particulars or deliberate furnishing of inaccurate particulars. On the facts noted, the Tribunal found the evidence insufficient to show that the cash credits and disputed receipt were income of the assessee or that concealment was established. Mere suspicion or an inadequate explanation was not enough to justify penalty, so the levy was held unjustified.

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Issues: Whether the levy of penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, was justified on the facts found.

Analysis: Penalty under section 28(1)(c) is penal in character, and the department must establish that the amounts in question represented the assessee's income and that there was concealment of particulars of income or deliberate furnishing of inaccurate particulars. The Tribunal found that the evidence was insufficient to prove that the cash credits and the disputed receipt were income of the assessee or that concealment was established. That finding was consistent with the governing principle that suspicion or inadequacy of explanation does not by itself justify penalty.

Conclusion: The levy of penalty was not justified and the question was answered in favour of the assessee and against the department.

Ratio Decidendi: In penalty proceedings for concealment of income, the revenue must prove the taxable nature of the amount and concealment or deliberate inaccuracy; failure to discharge that burden disentitles the department to penalty under section 28(1)(c) of the Indian Income-tax Act, 1922.

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