Unexplained cash balance and inconsistent explanations can sustain undisclosed-income addition and concealment penalty.

An unexplained cash balance used for a property purchase was treated as income from undisclosed sources where the assessee maintained no reliable accounts and gave inconsistent, unsupported explanations. The factual finding was based on a reasonable appreciation of the evidence and was not treated as perverse, so the addition was sustained. On the same facts, concealment of income and shifting stands before the revenue authorities were held sufficient to satisfy the conditions for penalty for concealment, and the penalty was upheld.

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Issues: (i) Whether the sum of Rs. 66,640 could be assessed as income from undisclosed sources for the assessment year 1950-51; (ii) Whether penalty under section 28(1)(c) was justified on the facts found.

Issue (i): Whether the sum of Rs. 66,640 could be assessed as income from undisclosed sources for the assessment year 1950-51.

Analysis: The assessee failed to maintain accounts or produce acceptable evidence to explain the source of the substantial cash balance used in the property purchase. The explanations given were inconsistent and unsubstantiated, and the Tribunal found them to be improbable and unsupported by any reliable material. The finding that the amount represented income from undisclosed sources was based on a reasonable appreciation of the evidence and could not be characterised as perverse.

Conclusion: The assessment of Rs. 66,640 as income from undisclosed sources was upheld and the answer was against the assessee.

Issue (ii): Whether penalty under section 28(1)(c) was justified on the facts found.

Analysis: The assessee was found to have concealed income and to have adopted untenable and shifting stands before the revenue authorities. On those facts, the ingredients required for levy of penalty were held to be satisfied.

Conclusion: The penalty under section 28(1)(c) was held to be valid and the answer was against the assessee.

Final Conclusion: Both reference questions were answered against the assessee, and the tax cases were dismissed with costs only in the first matter.

Ratio Decidendi: Where an assessee offers no reliable accounts or credible explanation for a substantial cash balance, and the finding that the amount represents undisclosed income is supported by evidence, the High Court will not interfere with that factual determination; concealment and inconsistent explanations may also justify penalty for concealment.

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