Concealment penalty sustained, but concealed income must be limited to the amount reasonably attributable to undisclosed income.

Concealment penalty is attracted where the return, search material, and later disclosure show that income was not fully and truly disclosed, and a belated explanation is not accepted. In assessing penalty, the concealed income must still be limited to the amount reasonably attributable to concealment; an estimate that is excessive may be reduced by considering earlier depreciation and possible savings available for investment. On these facts, concealment was found, penalty remained leviable, and the concealed income was restricted to a lower amount for penalty purposes.

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Issues: (i) Whether the assessee had concealed income so as to attract penalty; (ii) what should be the proper quantum of concealed income for penalty purposes.

Issue (i): Whether the assessee had concealed income so as to attract penalty.

Analysis: The original return, the search, and the subsequent voluntary disclosure petition together showed that the returned income was not a full and true disclosure. The explanation offered in the cross objection regarding the chitty subscriptions was raised belatedly and was not accepted.

Conclusion: Concealment was established and penalty was leviable.

Issue (ii): What should be the proper quantum of concealed income for penalty purposes.

Analysis: The estimate adopted by the tax authority was considered excessive. Having regard to the depreciation available from earlier years and some possible savings available for investment, the concealed income was reassessed at a lower figure.

Conclusion: The concealed income was restricted to Rs. 5,000 and the penalty was fixed at that amount.

Final Conclusion: The assessee's challenge to penalty failed, but the penalty was substantially reduced from the amount originally sustained, leaving the departmental appeal partly successful.

Ratio Decidendi: Where the surrounding circumstances disclose concealment, but the estimated concealed income is excessive, the penalty may be sustained only to the extent of the amount reasonably attributable to concealment.

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