Concealment penalty against legal representatives stands where estate liability extends to tax and the facts show sham investment concealment.

Concealment penalty under section 28(1)(c) of the Indian Income-tax Act, 1922 could continue against the legal representatives of a deceased assessee because section 24B made the estate liable for the deceased's tax liability, and penalty was treated as part of the assessment machinery. The delay in passing the penalty order was not fatal where it resulted from the pendency and communication of higher-court proceedings. On the facts, the share transaction findings showed a name-lender and a camouflage for the investment, so the assessee's failure to disclose the purchase and source of funds amounted to concealment and inaccurate particulars, justifying penalty on merits.

---

---

Issues: (i) whether penalty for concealment under section 28(1)(c) of the Indian Income-tax Act, 1922 could be continued and imposed against the legal representatives of a deceased assessee; (ii) whether the penalty proceedings were vitiated by unreasonable delay; and (iii) whether the facts established concealment of income so as to justify penalty on merits.

Issue (i): whether penalty for concealment under section 28(1)(c) of the Indian Income-tax Act, 1922 could be continued and imposed against the legal representatives of a deceased assessee.

Analysis: Section 24B of the 1922 Act made the legal representative liable in respect of the deceased's tax liability to the extent of the estate. The Court distinguished the wealth-tax cases relied on by the assessee, holding that their reasoning turned on the special structure of the Wealth-tax Act and did not control the 1922 Act. The scheme of Chapter IV of the 1922 Act treated penalty as part of the assessment machinery, and the term "tax" in the relevant context was wide enough to include penalty as an additional tax.

Conclusion: The penalty proceedings were maintainable against the legal representatives and this objection failed.

Issue (ii): whether the penalty proceedings were vitiated by unreasonable delay.

Analysis: The addition itself had been in dispute until it was finally confirmed by the Supreme Court, and subsequent consequential orders followed in the normal course. The delay in passing the penalty order was attributable to the pendency and communication of the higher court proceedings and could not fairly be treated as fatal.

Conclusion: The plea of unreasonable delay was rejected.

Issue (iii): whether the facts established concealment of income so as to justify penalty on merits.

Analysis: The Supreme Court's findings on the share transactions showed that the alleged purchaser was only a name-lender and that the assessee had devised a camouflage for the investment. On those facts, the investment represented the assessee's undisclosed income, and the failure to disclose the purchase and source of funds amounted to concealment and furnishing of inaccurate particulars.

Conclusion: Penalty under section 28(1)(c) was justified on merits.

Final Conclusion: The order cancelling the penalty was unsustainable, and the penalty imposed by the Income-tax Officer was restored.

Ratio Decidendi: Under the Indian Income-tax Act, 1922, the liability to tax in section 24B includes penalty as an additional tax, so concealment penalty can be continued against the legal representatives of a deceased assessee where the estate is liable.

---