Penalty for concealment needs independent proof beyond the assessment order; failure to explain credits alone is not enough.

Penalty under section 28(1)(c) of the Income-tax Act, 1922 is distinct from assessment proceedings and requires a separate satisfaction in the penalty stage that concealment or deliberate furnishing of inaccurate particulars has been proved. An assessment order may be relevant, but it is not by itself sufficient to sustain penalty. The burden remains on the department to adduce independent evidence of concealment, and the assessee's failure to explain credits at assessment does not automatically establish the penalty ingredients. On the stated facts, penalty was held invalid because no independent evidence was produced.

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Issues: Whether penalty under section 28(1)(c) of the Income-tax Act, 1922, can be validly imposed merely on the basis of the assessment order without independent evidence of concealment or deliberate furnishing of inaccurate particulars.

Analysis: Penalty proceedings under section 28 are distinct from assessment proceedings and commence after assessment is complete. The assessee is entitled to a separate opportunity of hearing, and the statutory language of section 28(1)(c), read with section 28(3), requires the authority in the penalty proceeding to be satisfied that concealment or deliberate furnishing of inaccurate particulars has been established. The assessment finding may be relevant, but it is not by itself sufficient to prove concealment. The burden lies on the department to prove the necessary ingredients, and failure of the assessee to explain the credits in assessment does not automatically establish concealment in penalty.

Conclusion: Penalty was not validly imposed, as the department adduced no independent evidence to prove concealment or deliberate furnishing of inaccurate particulars. The reference was answered in favour of the assessee.

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