Penalty under income-tax law requires proof of conscious concealment; mere disbelief of explanation is insufficient.

In penalty proceedings under section 28(1)(c) of the Indian Income-tax Act, 1922, the department had to prove that the disputed receipt was the assessee's income and that it was consciously concealed or inaccurately stated. An earlier assessment finding that the explanation was not believable did not, by itself, establish concealed income. As the Tribunal had not ignored admissible evidence or relevant circumstances, and its conclusion was not shown to be unreasonable or perverse, the penalty was held unsustainable in law and the issue was answered in favour of the assessee.

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Issues: Whether the Tribunal was in holding that the penalty of Rs. 2 lakhs levied under section 28(1)(c) of the Indian Income-tax Act, 1922 was not sustainable in law.

Analysis: The finding recorded in the penalty proceedings was treated as one of fact. In such proceedings, the department had to establish that the disputed receipt represented the assessee's income and that he had consciously concealed it or furnished inaccurate particulars. The earlier assessment finding that the explanation was not believable did not, by itself, make the receipt conclusive proof of concealed income. The record did not show that the Tribunal had ignored admissible evidence or relevant circumstances, nor was its conclusion shown to be unreasonable or perverse.

Conclusion: The Tribunal's view that the penalty could not be sustained was not erroneous in law, and the question was answered in the negative, in favour of the assessee.

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