Concealment penalty cannot follow a quantum addition alone where cash deposits are treated as business receipts under presumptive taxation.

Penalty under section 271(1)(c) was held unsustainable where cash deposits were treated as business receipts under the presumptive scheme in section 44AD. The assessment addition by itself did not justify concealment penalty, because quantum and penalty proceedings are separate and the existence of an addition does not automatically establish inaccurate particulars or concealment. On the material considered, the receipts were capable of treatment as business transactions, so the penalty was deleted and relief was granted to the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee's cash deposits were treated as business receipts under section 44AD and the corresponding quantum addition had been made.

Analysis: The penalty was based on the addition arising from cash deposits and the assessment under the presumptive scheme. The reasoning accepted that, once the assessee was covered by section 44AD, the cash deposits could be treated as business transactions. The decision also applied the principle that quantum and penalty proceedings are separate and that an addition in assessment does not automatically attract penalty.

Conclusion: The penalty under section 271(1)(c) was deleted and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Penalty for concealment or furnishing inaccurate particulars cannot be sustained merely because a quantum addition is made, particularly where the material supports treatment of the receipts as business transactions under the presumptive taxation scheme.

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