Penalty under section 271(1)(c) fails without evidence linking cash credits to concealed income after assessee discharges initial burden.

Penalty under section 271(1)(c) was not sustainable where cash credits were treated as non-genuine in assessment only for lack of proof of creditors' creditworthiness, but the Department brought no further material to establish concealment of income. The assessee had examined the creditor and thereby discharged the initial burden in the penalty proceedings. In the absence of additional evidence linking the impugned credits to concealed income, the statutory explanation to the penalty provision did not justify levy of penalty, 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 on the assessee in respect of the impugned cash credits and alleged concealment of income.

Analysis: The credits had been accepted as non-genuine in the assessment proceedings for want of proof of the creditors' creditworthiness, but no further material was brought by the Department to show that the amount represented concealed income. The assessee had examined the creditor, thereby discharging the initial burden in the penalty proceedings. In the absence of additional evidence connecting the cash credits with concealment, the statutory explanation to the penalty provision did not justify imposition of penalty.

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

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