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Assessment of undisclosed income and imposition of penalty under section 28(1)(c) of the Income-tax Act. Analysis: The case involved an assessee, a contractor in Lodna Colliery, who declared an income of Rs. 9,771 for the assessment year 1953-54 but was found to have invested Rs. 68,000 in Parikh Stores in his wife's name. The assessee claimed to have taken a loan of Rs. 38,000 and invested Rs. 30,000 from his savings, but discrepancies arose during the assessment. The Income-tax Officer added Rs. 43,000 to the taxable income as unexplained investment. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this addition. Subsequently, a penalty of Rs. 11,000 was imposed on the assessee under section 28(1)(c) for wilful concealment of income, which was upheld by the Appellate Assistant Commissioner but later set aside by the Income-tax Appellate Tribunal. The High Court was tasked with determining whether the penalty was justifiable under section 28(1)(c) based on the facts and circumstances of the case. The Commissioner of Income-tax argued that there was deliberate concealment of income by the assessee, citing discrepancies in the explanation provided by the assessee and the alleged creditors. However, the High Court emphasized that in penal proceedings under section 28(1), the onus lies on the income-tax department to prove the assessee's guilt of concealment or furnishing inaccurate particulars of income. The High Court referred to legal precedents, including a decision by the House of Lords, to establish that the burden of proof rests with the department to impose such penalties. It noted that the department failed to demonstrate wilful suppression of income by the assessee. The Court highlighted that the Income-tax Appellate Tribunal's order did not establish deliberate suppression of income but rather a lack of satisfactory explanation for the additional income. Distinctions were drawn from previous cases cited by the department, indicating the uniqueness of the present case. Ultimately, the High Court concluded that there was insufficient evidence to support the imposition of a penalty under section 28(1)(c) against the assessee. The question of law was answered in favor of the assessee, ruling against the income-tax department. The Court declined to award costs in the matter, considering the circumstances of the case.
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