Penalty for concealment fails where the assessee disclosed actual receipt and gave a bona fide explanation

Penalty under section 271(1)(c) applies only where income is concealed or inaccurate particulars are furnished. Where the assessee disclosed the amount actually received, computed capital gains on that basis, and placed the relevant facts on record, the explanation for the return was treated as bona fide. The quantum addition that formed the basis of the penalty did not survive on the capital gains issue, so the penalty foundation failed. On those facts, the penalty was held not exigible and its deletion was sustained.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee had disclosed the amount actually received, the higher addition on capital gains did not survive, and the explanation for the return filed was found to be bona fide.

Analysis: The penalty provision applies only where there is concealment of income or furnishing of inaccurate particulars. The assessee had disclosed the amount actually received and had accounted for capital gains on that basis. The quantum addition forming the foundation of the penalty was no longer sustainable in view of the subsequent decision on the capital gains issue. In these circumstances, the explanation that tax was offered only on the amount received was treated as bona fide, and the material facts necessary for computation were held to have been placed on record.

Conclusion: The penalty under section 271(1)(c) was not exigible and its deletion was upheld in favour of the assessee.

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