Bona fide omission of spouse's interest income did not justify penalty for concealment under income-tax law.

Penalty under section 271(1)(c) was held unsustainable where the assessees did not consciously conceal or suppress income by omitting interest income earned by their wives and includible under section 64(iii). The tribunal accepted that the assessees had returned substantial income and held a bona fide belief that the wives' interest income was not part of their total income. The later legal position for an earlier year was not available when the returns were filed, and the failure to revise the returns was treated as a lapse arising from want of proper legal advice, not deliberate furnishing of inaccurate particulars. The penalties were cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable for non-disclosure of interest income earned by the assessee's wife, which was includible in the assessee's total income under section 64(iii) of the Income-tax Act, 1961.

Analysis: The omission was found to be without conscious concealment or suppression of income. The assessees had returned substantial income and had a bona fide belief that the wives' interest income did not form part of their total income. The later decision in the earlier year was not available when the returns were filed, and the failure to revise the returns was treated as, at most, a lapse arising from want of proper legal advice, not as deliberate concealment or furnishing of inaccurate particulars.

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

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