Concealment penalty requires positive evidence; unexplained cash credit assessed as undisclosed income was not enough.

Penalty under section 271(1)(c) was not sustainable where an unexplained cash credit was assessed as income from undisclosed sources but no positive material showed concealment. The assessee's explanation was rejected for assessment purposes, yet that inference alone did not establish deliberate concealment for penalty. The department remained bound to prove concealment by positive evidence and failed to discharge that burden. Applying the rule in Anwar Ali, the tribunal held that assessment of unexplained income and levy of concealment penalty are distinct, and the penalty was cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on the basis of an unexplained cash credit treated as income from undisclosed sources.

Analysis: The assessee's explanation for the cash credit was not accepted for assessment purposes, but the record did not contain positive material showing that the amount was concealed income. The assessment inference that the credit represented income from undisclosed sources was held sufficient for assessment, yet insufficient by itself to establish concealment for penalty. The burden lay on the department to prove concealment by positive evidence, which was not discharged. The rule in Anwar Ali was treated as applicable.

Conclusion: Penalty was not justified and was cancelled.

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