Protective assessment cannot by itself establish concealment for penalty where actual receipt of interest is unproved.

Penalty for concealment under section 271(1)(c) was stated to require actual concealment of income, and a protective assessment alone was not enough to establish that element. The interest amount had been brought to tax only on a protective basis, and the record did not show that the assessee had advanced the alleged loan or actually received the interest. On that basis, the concealment allegation could not be sustained and the penalty was cancelled in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable for alleged concealment of interest income that had been assessed only on a protective basis.

Analysis: Penalty for concealment can be sustained only where concealment of income is established. The interest amount in dispute had been brought to tax on a protective basis, and there was no evidence on record to show that the assessee had in fact advanced the alleged loan or received the interest. In these circumstances, the mere protective inclusion of the amount did not justify a finding of concealment.

Conclusion: The penalty was not sustainable and was cancelled, in favour of the assessee.

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