Penalty for alleged concealment fails where capital gains were not taxable in the year and disclosure was made.

Penalty under section 271(1)(c) was held unsustainable because the assessee had disclosed the receipt, claimed exemption under section 54F, and the capital gains arose from a development agreement under which only part consideration was received during the year. The assessee had invested more than the receipt in a residential house, and the view that taxability would arise only on actual receipt was treated as a reasonable belief. In the absence of taxable capital gain for the year, the basis for alleging concealment or furnishing of inaccurate particulars failed, and the assessee succeeded.

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Issues: Whether penalty under section 271(1)(c) was leviable where the assessee had disclosed the receipt, claimed exemption under section 54F, and the capital gains computation arose from a development agreement.

Analysis: The assessee had received only part consideration during the year and had invested an amount exceeding the receipt in a residential house, on which deduction under section 54F had been allowed. The dispute turned on whether the assessee's treatment of the transaction amounted to concealment or furnishing of inaccurate particulars. In the surrounding capital gains controversy, the agreement had not resulted in receipt of the full alleged consideration, and the belief that taxability would arise only on actual receipt was held not to be unreasonable. In these circumstances, absence of taxable capital gain for the year negatived the foundation for penalty.

Conclusion: Penalty under section 271(1)(c) was not sustainable and the assessee succeeded.

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