Penalty for concealment requires revenue to prove deliberate inaccuracy beyond reasonable doubt, not mere rejection of explanation.

Penalty under section 28(1)(c) of the Income-tax Act, 1922 is penal in nature because it applies only where conscious concealment of income or deliberate furnishing of inaccurate particulars is established. The burden to prove the facts attracting penalty lies on the revenue, and those conditions must be established beyond reasonable doubt. On the facts, the Tribunal found that the assessments rested on estimates and inferences and that concealment or deliberate inaccuracy was not positively proved, so the penalty provision did not apply and the penalty orders could not be sustained.

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Issues: (i) whether the penalty provision under section 28(1)(c) of the Income-tax Act, 1922, is penal in nature; (ii) whether the burden of proving the conditions for penalty lies on the revenue; (iii) whether those conditions must be proved beyond reasonable doubt; and (iv) whether, on the facts, the Tribunal was right in holding that the requisite conditions for penalty were not satisfactorily established.

Issue (i): whether the penalty provision under section 28(1)(c) of the Income-tax Act, 1922, is penal in nature.

Analysis: The provision authorises imposition of a penalty only where concealment of income or deliberate furnishing of inaccurate particulars is established. Its operation is therefore conditioned upon proof of a culpable state of affairs rather than a mere adjustment of assessment.

Conclusion: The provision is penal in nature.

Issue (ii): whether the burden of proving the conditions for penalty lies on the revenue.

Analysis: Penalty cannot be imposed unless the department establishes the facts that attract the provision. Mere rejection of the assessee's explanation does not automatically discharge that burden in favour of the revenue.

Conclusion: The burden lies on the revenue.

Issue (iii): whether those conditions must be proved beyond reasonable doubt.

Analysis: The court applied the rule that the circumstances must reasonably point to conscious concealment or deliberate furnishing of inaccurate particulars, and that the existence of the income and the guilty intent cannot rest on suspicion or inference alone.

Conclusion: The conditions must be established beyond reasonable doubt.

Issue (iv): whether, on the facts, the Tribunal was right in holding that the requisite conditions for penalty were not satisfactorily established.

Analysis: The Tribunal found that the assessments rested on estimates and inferences and that the department had not positively established concealment or deliberate inaccuracy. On that factual basis, the penalty provision was held inapplicable.

Conclusion: The Tribunal was right in holding that the requisite conditions were not satisfactorily established.

Final Conclusion: The reference was answered in support of the assessee, and the penalty orders could not be sustained on the material found by the Tribunal.

Ratio Decidendi: Penalty under section 28(1)(c) can be imposed only when the revenue proves conscious concealment or deliberate furnishing of inaccurate particulars on the basis of material that reasonably establishes the charge; mere rejection of the assessee's explanation is not enough.

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