The burden of proof lies with the Income-tax Department to establish concealment of income or deliberate furnishing of inaccurate particulars of income in penal proceedings under Sec.28 (1) (c) of the Income-tax Act.

1. In this case the assessee is a Hindu undivided family. The assessment year is 1947-48 and the accounting year is the Sambat year 2002-2003 Dewali, corresponding to the period from 4-11-1945, to 23-10-1946. In this accounting year there was a credit entry of Rs. 22,940 found in the books of the assessee with regard to the hardware business. When asked to explain the assessee stated that it represented the sale proceeds of gold ornaments of Srimati Purnima Debi, who is the wife of Chagganlal, one of the members of the Hindu undivided family. The explanation was not accepted by the Income-tax Officer, who held that the amount of Rs. 22,940 was the secreted profit of the hardware business. Taking this and other circumstances into account the Income-tax Officer estimated the income to be Rs. 75,000. But on appeal the estimate of profit was reduced to Rs. 50,000 by the Appellate Assistant Commissioner, Both the Income-tax Officer and the Appellate Assistant Commissioner have taken the view that the building constructed at Ranchi and standing in the name of Srimati Purnima Debi really belonged to the Hindu undivided family, and this circumstance should be taken into account in making the estimate of the assessees income. But the appellate tribunal held that there was nothing to connect the assessees family with the construction of the building at Ranchi and so that circumstance ought to be ignored in making the estimate of the assessees income. The appellate tribunal estimated the profits of the assessee from the hardware business to be Rs. 20,000. Thereafter, a proceeding was started by the Income-tax Officer under Sec.28 (1) (c) of the Income-tax Act for levying penalty upon the assessee for concealment of income. It was held by the Income-tax Officer that the assessee was liable to pay penalty under Section 28 (1) (c) of the Act, and the amount of penalty imposed was Rs. 4,800. The order of the Income-tax Officer has been upheld by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal in appeal.

2. Under Sec. 66 (2) of the Income-tax Act the appellate tribunal has stated a case and referred it to the High Court on the following question of law :

"Whether in the facts and circumstances the penalty has been validly imposed upon the assessee under Sec.28 (1) (c) of the Income-tax Act?"

3. Sec.28 (1) (c) of the Income-tax Act provides as follows :

"28. Penalty for concealment of income or improper distribution of profits.--If the Income Tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal, in the course of any proceedings under this Act, is satisfied that any person - *****

(c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income : he or it may direct that such person shall pay by way of penalty, in the case referred to in Clause (a), in addition to the amount of the income-tax and super-tax, if any payable by him, a sum not exceeding one and a half times that amount, and in the cases referred to in Clauses (b) and (c), in addition to any tax payable by him, a sum not exceeding one and a half times the amount of the income-tax and super-tax, if any, which would have been avoided if the income as returned by such person had been accepted as the correct income."

4. The argument put forward by learned counsel on behalf of the assessee is that there is no material on the record of the proceedings to suggest that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income. The argument of learned counsel was that the proceeding under Sec.2 8 of the Income-tax Act is a penal proceeding and the onus lies on the Income-tax Department to show that the assessee is guilty of concealment of the particulars of his income or deliberate furnishing of inaccurate particulars of such income. In our opinion, the argument is correct, and in a penal proceeding under Sec.2 8 of the Inc