Penalty for concealment fails where cash credits are supported by affidavits and expenditure genuineness is not disputed.

Penalty under section 271(1)(c) was held unsustainable where the cash credits were supported by creditors' affidavits and the assessee had discharged the burden of showing that the credits did not represent real income. The disallowance of expenditure under section 40A(3) also did not establish concealment, because the genuineness of the expenditure itself was not disputed by the Departmental authorities. On these facts, the additions were not treated as concealment of income, 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 sustainable on the additions relating to cash credits and disallowance of expenditure.

Analysis: The disputed cash credits were supported by affidavits of the creditors, and the assessee had discharged the burden of showing that the credits did not represent real income. The disallowance of expenditure was made under section 40A(3), while the genuineness of the expenditure itself was not disputed by the Departmental authorities. On these facts, the additions could not be treated as concealment of income.

Conclusion: Penalty under section 271(1)(c) was not justified and was cancelled in favour of the assessee.

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