Gireesh Bhalla : Concealment of income

1) Penalty can be levied only if it is proved beyond doubt that the assessee has concealed income or furnished inaccurate particulars thereof.  It is necessary for the authority levying penalty to prove that, (i) there was a concealment of income, and that (ii) the assessee was conscious of having concealed or furnished inaccurate particulars of his income. 
2)   In CIT vs. Saraf Trading Corporation (1987) 167 ITR 909 (Ker), it was held that the penalty proceedings are quasi criminal proceedings and there should be conscious concealment.  The findings in the assessment proceedings are not conclusive but are relevant.  The entire material available should be considered afresh by the authorities before imposing the penalty. 
3) The Supreme Court observed “An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceeding and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligations.” 
4)   CIT vs Shiv Lal Desai and Sons (1978) 114 ITR 377 (Bom), it was held that merely because the payment of Rs. 55,000/- has been disallowed in the assessment proceeding of the assessee, it will not necessarily bring in its wake of levy of penalty.  They held that department had failed to prove that the assessee was guilty of the offence charged