Penalty for unexplained cash credits requires independent proof of concealment, not merely a surviving quantum addition.

Penalty under section 271(1)(c) cannot be sustained merely because an addition survives in quantum proceedings for unexplained cash credits. Penalty and assessment proceedings are distinct, and concealment of income or furnishing of inaccurate particulars must be independently established. Where the issue is debatable and the assessee's explanation is supported by evidence, the mere existence of a quantum addition does not justify penal consequences. The penalty was deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable on the basis of the addition made in quantum proceedings for unexplained cash credits.

Analysis: The assessee was proceeded ex parte, but the record showed that the penalty arose from an addition treated as unexplained cash credits. The legal position applied was that quantum and penalty proceedings are distinct and parallel, and every addition or disallowance in assessment does not automatically justify penalty. Where the issue is debatable and the explanation is supported by evidence, penalty is not to be imposed merely because the quantum addition survived.

Conclusion: The penalty was deleted and the issue was decided in favour of the assessee.

Ratio Decidendi: Penalty under section 271(1)(c) is not automatic from a quantum addition; it can be sustained only where concealment of income or furnishing of inaccurate particulars is independently established.

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