Penalty for unexplained cash credit fails without positive evidence of concealment under income-tax law.

Penalty under section 271(1)(c) of the Income-tax Act was held not leviable where an unexplained cash credit was brought to tax as income from undisclosed sources only because the assessee failed to give satisfactory evidence. The record contained no positive material proving concealment, and the mere inference used for assessment was insufficient for penalty. The revenue was required to establish concealment by evidence beyond the addition itself, so the cancellation of penalty was upheld and the assessee's relief was confirmed.

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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 assessed as income from undisclosed sources.

Analysis: The amount was treated as income for assessment because the assessee failed to produce satisfactory evidence regarding the cash credit, but the record did not contain positive material showing that the amount was concealed income. For penalty, the revenue had to establish concealment by evidence beyond the mere inference drawn for assessment purposes. The finding that the credit was not satisfactorily explained was sufficient for assessment, but not enough by itself to justify penalty.

Conclusion: Penalty under section 271(1)(c) was not leviable and the cancellation of penalty was upheld in favour of the assessee.

Final Conclusion: The appeal failed, and the penalty deletion stood confirmed.

Ratio Decidendi: An addition made on inference for want of satisfactory explanation does not, without positive material proving concealment, justify penalty for concealment of income.

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