Concealment penalty may rest on pocket notebook entries and surrounding circumstances when deliberate suppression is shown.

Penalty under concealment provisions may be sustained where entries in a pocket note book, cross-checked with regular books and surrounding circumstances, show deliberate suppression of turnover not disclosed in the return. The stated material was treated as more than a mere rejection of the assessee's explanation, because the omission followed a surprise inspection and the concealment would not otherwise have been detected. On quantum, the penalty was considered justifiable because no mitigating circumstances were shown for reduction, and the assessment of penalty followed the governing Supreme Court authority on concealment cases.

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Issues: (i) Whether penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, was rightly levied on the basis of the material found in the pocket note book and the surrounding circumstances; (ii) Whether the quantum of penalty levied was justifiable.

Issue (i): Whether penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, was rightly levied on the basis of the material found in the pocket note book and the surrounding circumstances.

Analysis: The material on record went beyond a mere rejection of the assessee's explanation. The entries in the pocket note book were found to relate to the assessee's business, some entries tallied with the regular books, and the return for the relevant assessment year omitted the suppressed turnover despite the inspection having occurred earlier. These circumstances supported an inference that the turnover had been deliberately kept out of the income-tax return and that the concealment would not have been discovered but for the surprise inspection. The finding of deliberate suppression was thus supported by evidence and not by suspicion alone.

Conclusion: The penalty under section 28(1)(c) was rightly levied and the finding was against the assessee.

Issue (ii): Whether the quantum of penalty levied was justifiable.

Analysis: The Tribunal found no mitigating circumstances warranting reduction of the penalty, and the issue was governed by the applicable Supreme Court authority on the quantum of penalty in concealment cases.

Conclusion: The quantum of penalty was justifiable and the finding was against the assessee.

Final Conclusion: The concealment finding and the penalty on the suppressed turnover were upheld in full, leaving the revenue entitled to costs.

Ratio Decidendi: In penalty proceedings for concealment, deliberate suppression may be inferred from concrete surrounding circumstances and reliable material on record, and the quantum of penalty will stand where no mitigating circumstances are shown.

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