Concealment penalty requires more than an accounting mistake: inadvertent omission without conscious suppression will not attract penalty.

Penalty for concealment cannot be sustained where an omission in the accounts is shown to be an inadvertent accounting mistake and the surrounding circumstances do not establish conscious suppression of income. The ITAT Cochin found that the sales register and other books were produced before the Assessing Officer, the quantitative particulars in the original and revised returns substantially tallied, and the assessee had not deliberately withheld material facts. It further noted that a later explanation about trade discounts and voluntary disclosure did not show a guilty mind in the original return. On these facts, gross negligence was also not proved, so penalty under section 271(1)(c) was cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable for non-posting of December 1974 sales in the ledger and the resulting alleged concealment of income.

Analysis: The omission was found to be an inadvertent mistake rather than a conscious suppression. The sales register and other books were produced before the Assessing Officer, the quantitative particulars in the original and revised returns substantially tallied, and the circumstances showed that the assessee had not deliberately withheld the relevant material. The subsequent explanation regarding trade discounts and the voluntary disclosure did not establish that the original return was filed with a guilty mind. The Court also held that, even where proof of mens rea is not indispensable, every accounting mistake does not attract penalty; the surrounding circumstances must show an attempt to conceal income. On the facts, gross negligence was also not established.

Conclusion: Penalty under section 271(1)(c) was not leviable and was cancelled.

Ratio Decidendi: Penalty for concealment cannot be sustained where the omission to return income is shown to be an inadvertent accounting mistake and the surrounding circumstances do not establish conscious concealment or gross negligence.

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