Concealment penalty requires cogent evidence; mere failure to explain deposits does not by itself prove deliberate default.

The Allahabad HC noted that the Tribunal had not ignored material relied on by the Appellate Assistant Commissioner, because the orders and supplementary statement showed the assessee's agreement to the additions had been considered. It also reaffirmed that penalty for concealment under section 28(1)(c) of the Income-tax Act, 1922 cannot rest only on the assessee's failure to prove the nature and source of deposits; absent cogent evidence of deliberate default, concealment or furnishing of inaccurate particulars cannot be inferred, and the department retains the burden of proof.

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Issues: (i) Whether the Tribunal vitiated its decision by failing to consider all material that had been relied upon by the Appellate Assistant Commissioner in upholding penalty. (ii) Whether failure of the assessee to prove the nature and source of deposits, by itself, justified penalty for concealment under section 28(1)(c) of the Income-tax Act, 1922.

Issue (i): The supplementary statement of the case showed that the Tribunal had taken into account the assessee's agreement to the additions while deciding the appeal. On a reading of the orders and the supplementary statement together, it could not be said that any material considered by the Appellate Assistant Commissioner had been ignored by the Tribunal.

Conclusion: The first question was answered against the department.

Issue (ii): Penalty under section 28(1)(c) could not be sustained merely because the assessee failed to establish the nature and source of the deposits. In the absence of cogent material evidence beyond the falsity of the explanation, deliberate concealment or furnishing of inaccurate particulars could not be inferred, and the burden remained on the department to establish liability.

Conclusion: The second question was answered against the assessee and in favour of the department.

Final Conclusion: The reference was disposed of by answering both questions in the negative and against the department, with no order as to costs.

Ratio Decidendi: In penalty proceedings for concealment, mere failure of the assessee to prove an explanation does not by itself establish concealment or inaccurate particulars unless supported by cogent material evidence showing deliberate default.

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