Concealment penalty sustained where the assessee failed to prove the source of additions or show bona fide disclosure.

Penalty for concealment under section 271(1)(c) was upheld because the assessee failed to substantiate the explanation for the disputed addition and did not prove bona fides with full disclosure of material facts. The claimed sources of savings from marriage gifts, interest from cultivators, and agricultural income were rejected for want of supporting evidence, and the quantum addition had already been sustained. Applying Explanation 1B, the unexplained amount was deemed concealed income, making cancellation of penalty unsustainable and restoring the penalty in favour of Revenue.

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Issues: Whether penalty for concealment of income under section 271(1)(c) read with Explanation 1B was rightly cancelled by the appellate authority despite the assessee's failure to substantiate the source of the disputed amount and to show that the explanation was bona fide.

Analysis: The explanation of savings from marriage gifts, interest income from cultivators, and agricultural income had not been substantiated before the lower authorities. The appellate authority had already rejected the explanation in the quantum proceedings and sustained the addition. Under Explanation 1B to section 271(1)(c), once the assessee is unable to substantiate the explanation, the added amount is deemed to represent concealed income unless the explanation is shown to be bona fide and all material facts are disclosed. On the facts found, the assessee produced no supporting evidence and the explanation was neither proved nor shown to be in good faith.

Conclusion: The cancellation of penalty was unsustainable and the penalty imposed by the Income-tax Officer was restored, in favour of Revenue.

Final Conclusion: The assessee was held liable to penalty for concealment of income and the departmental appeal succeeded.

Ratio Decidendi: Where an assessee fails to substantiate the explanation for an addition and does not establish bona fides with full disclosure of material facts, the amount added is deemed to represent concealed income for the purposes of section 271(1)(c).

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