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Issues: Whether penalty under section 28(1)(c) of the Income-tax Act, 1922 could be sustained merely because the assessee's explanation for a disputed receipt was found false, and whether the revenue had discharged the burden of proving concealment or deliberate furnishing of inaccurate particulars.
Analysis: Penalty proceedings under section 28(1)(c) are penal in character and intended to deter concealment of income. The department must therefore establish that the disputed amount was in truth a revenue receipt and that the assessee concealed the particulars of income or deliberately furnished inaccurate particulars. A false explanation, by itself, does not necessarily prove that the receipt is taxable income. A finding in assessment proceedings rejecting the assessee's explanation is relevant and good evidence, but it is not conclusive in penalty proceedings. The entirety of the circumstances must reasonably support the conclusion that the amount represented income and that concealment was conscious and deliberate.
Conclusion: The revenue was not required to prove the case by independent direct evidence in every instance, but on the facts no material beyond the falsity of the explanation was shown to establish concealment or deliberate furnishing of inaccurate particulars. The penalty was therefore rightly upheld.
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