Concealment penalty requires clear proof of wilful suppression; assessment additions alone do not justify penalty.

Penalty for concealment under the Indian Income-tax Act, 1922 requires the revenue to prove by clear evidence wilful concealment of material particulars of income; the burden and standard are not the same as in assessment proceedings. A mere addition in assessment does not by itself justify penalty. The Tribunal's approach, treating the evidentiary burden in penalty proceedings as identical to assessment, was incorrect, and the penalty under section 28(1)(c) was therefore not sustainable.

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Issues: Whether the penalty imposed under section 28(1)(c) of the Indian Income-tax Act, 1922 was sustainable on the footing that the burden and quantum of proof were the same as in assessment proceedings.

Analysis: The reference arose from an assessment year governed by the Indian Income-tax Act, 1922. The decisive question was the standard of proof required before penalty could be levied for concealment. The Tribunal had proceeded on the view that the evidence necessary to justify penalty was no different from that required for assessment. The governing principle applied was that penalty cannot be imposed unless the revenue establishes by clear evidence that the assessee can reasonably be said to have wilfully concealed material particulars of income. Mere addition in assessment was not enough to discharge that burden.

Conclusion: The Tribunal's view on the burden of proof was erroneous and the penalty under section 28(1)(c) was not sustainable; the answer was in the negative, in favour of the assessee.

Ratio Decidendi: In penalty proceedings for concealment, the revenue must prove by clear evidence wilful concealment of material particulars of income, and the standard is not identical to that governing assessment additions.

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