Debatable tax claim bars penalty under concealment provisions when the legal position was unsettled at filing.

Penalty under section 271(1)(c) was not sustainable where the assessee's claim for guest house expenses and treatment of interest income from fixed deposit receipts under section 80HHC was debatable on the date the return was filed. The legal position on the disputed expenditure had not yet been finally settled against the assessee, so the claim could not be characterised as attracting concealment or furnishing of inaccurate particulars. The penalty deletion was therefore left undisturbed, and the appeal was dismissed.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was liable to be deleted in respect of guest house expenses and the claim of interest income from fixed deposit receipts under section 80HHC.

Analysis: The return for the relevant assessment year had been filed before the legal position on the disputed expenditure was finally settled against the assessee. On that basis, the claim was treated as debatable on the date of filing, and a penalty could not be sustained for such a claim.

Conclusion: The deletion of penalty was not disturbed, and the appeal was dismissed.

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