Concealment penalty requires cogent proof of deliberate suppression; an unaccepted explanation alone is not enough.

Penalty for concealment cannot be sustained merely because the assessee failed to prove unexplained cash credits as borrowed amounts. In proceedings under section 28(1)(c) of the Indian Income-tax Act, 1922, the department must adduce cogent material showing that the disputed receipts were taxable income and that the assessee deliberately concealed particulars of income or furnished inaccurate particulars. A rejected explanation, or the mere fact that assessment additions survived, is insufficient by itself. On the material before the Tribunal, there was no independent evidence of conscious concealment, so penalty was held unsustainable.

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Issues: Whether penalty under section 28(1)(c) of the Indian Income-tax Act, 1922, was sustainable on the basis of the assessee's failure to prove that unexplained cash credits were borrowed amounts.

Analysis: Penalty proceedings are penal in character, and the burden lies on the department to establish concealment of income or deliberate furnishing of inaccurate particulars. A mere rejection of the assessee's explanation, or the fact that additions were sustained in the assessment proceedings, is not enough by itself to justify a penalty. The department must adduce cogent material showing that the disputed receipts constituted taxable income and that the assessee consciously concealed particulars of income or furnished inaccurate particulars. On the record, there was no independent material before the Tribunal to support such a conclusion; the finding rested only on the assessee's inability to prove the credits as borrowings.

Conclusion: The question was answered in the negative. Penalty under section 28(1)(c) could not be sustained on the material before the Tribunal, and the decision was in favour of the assessee.

Ratio Decidendi: In penalty proceedings for concealment, the department must prove by cogent material that the disputed amount is taxable income and that the assessee deliberately concealed income or furnished inaccurate particulars; a false or unaccepted explanation alone does not justify penalty.

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