Penalty for concealment requires positive proof; rejection of the assessee's explanation alone will not justify levy.

Penalty for concealment of income or furnishing inaccurate particulars is penal in nature, so the department must establish a positive element of default and cannot rely merely on rejection of the assessee's explanation. A stock discrepancy by itself is insufficient unless supported by material showing concealment or deliberate furnishing of inaccurate particulars. Here, the Tribunal had only disbelieved the explanation and had not found any additional evidence to support the charge, so the levy of penalty was not justified and the question was answered in favour of the assessee.

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Issues: Whether the levy of penalty for concealment of income or furnishing inaccurate particulars was justified on the facts and circumstances of the case.

Analysis: Proceedings for penalty under section 28 are penal in nature, and the burden lies on the department to establish the default. A mere rejection of the assessee's explanation about stock discrepancies is not enough to sustain penalty. The material must show a positive element from which concealment of income or deliberate furnishing of inaccurate particulars can be inferred. On the facts, the Tribunal had only rejected the explanation and had not established any additional material to support the charge.

Conclusion: The levy of penalty was not justified and the question was answered in the negative, in favour of the assessee.

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