Bona fide exemption claim cannot attract concealment penalty when disallowance alone does not prove inaccurate particulars.

Penalty under section 271(1)(c) was held unsustainable where the assessee's long-term capital gain exemption claim under section 10(38) was supported by broker bills and was made under a bona fide belief. The Tribunal noted that the Assessing Officer had not examined the exemption issue at the assessment stage, and the penalty was triggered only after the appellate authority later found the statutory conditions for exemption were not met. A claim that is ultimately disallowed in law does not, by itself, establish concealment or furnishing of inaccurate particulars. On that basis, the penalty was cancelled.

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Issues: Whether penalty under section 271(1)(c) was leviable for the assessee's claim of exemption under section 10(38) in respect of long-term capital gain, when the claim was made on the basis of broker bills, the relevant issue had not been examined by the Assessing Officer, and the explanation offered was found to be bona fide.

Analysis: The penalty was not founded on any finding by the Assessing Officer on the allowability of exemption under section 10(38), but arose only after the appellate authority held that the statutory conditions for exemption were not satisfied. The Tribunal noted that the penalty proceedings had originally been initiated on a different basis, and that the later disallowance of the exemption in appeal did not by itself establish concealment or furnishing of inaccurate particulars. The claim was supported by the documentary record and was accepted as having been made under a bona fide belief. Applying the principle that a claim which is ultimately unsustainable in law does not automatically attract penalty, the Tribunal held that the facts did not justify levy of penalty under section 271(1)(c).

Conclusion: The penalty under section 271(1)(c) was not sustainable and was cancelled.

Final Conclusion: The assessee succeeded in challenging the penalty, and the levy for concealment or furnishing of inaccurate particulars was set aside.

Ratio Decidendi: Mere disallowance of a bona fide claim, without a finding of concealment or furnishing of inaccurate particulars and without examination of that issue by the Assessing Officer, does not warrant penalty under section 271(1)(c).

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