Bona fide tax claims and accepted valuation basis defeated penalty for concealment and inaccurate particulars.

Penalty under section 271(1)(c) was held unsustainable because the assessee's depreciation claim on a composite land-and-building valuation had been accepted in earlier years, and the assessee had obtained valuation support and identified the land component for tax purposes. The disallowance linked to section 80HHD(4) also reflected a bona fide view that motor cycles used in tour operations qualified as utilisation of the reserve. On these facts, there was no concealment or furnishing of inaccurate particulars, and a mere unsustainable claim or bona fide mistake did not attract penalty. The penalty was therefore deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee had claimed depreciation on a composite land and building value and had also treated purchase of motor cycles as utilisation for section 80HHD(4) purposes.

Analysis: The penalty could not be upheld on the facts found. The depreciation claim arose from a composite valuation of land and building that had been accepted in earlier years, and the assessee itself obtained a valuation and identified the land component for tax purposes. The disallowance under section 80HHD(4) also stemmed from the assessee's bona fide understanding that motor cycles purchased for tour operations qualified as utilisation for the reserve. On these facts, the conduct did not amount to concealment or furnishing of inaccurate particulars. Penalty under section 271(1)(c) is attracted only where the statutory conditions are satisfied, and a mere unsustainable claim or a bona fide mistake does not justify penalty.

Conclusion: Penalty under section 271(1)(c) was not exigible and was deleted, in favour of the assessee.

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