Bona fide claim on enhanced compensation blocks penalty where taxability is debatable and no concealment is shown.

Penalty under section 271(1)(c) was held unsustainable where the assessee's claim on the taxability of enhanced compensation was bona fide and the year of taxability was debatable. The authorities found no concealment of income and no furnishing of inaccurate particulars; the assessee had merely advanced a plausible view that the enhanced compensation had not attained finality. In these circumstances, and consistent with earlier cases on the same issue, the Revenue could not justify penalty.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act was leviable where the assessee's claim regarding taxability of enhanced compensation was bonafide and the issue as to the year of taxability was debatable.

Analysis: The assessee received enhanced compensation on acquisition of land and the revenue levied penalty in addition to taxing the amount as capital gains. The appellate authorities found that there was no concealment of particulars of income and that the assessee had only taken a bonafide plea that the enhanced compensation had not attained finality. It was also noticed that the issue whether the income was taxable in the relevant year was debatable. In such circumstances, and in view of the earlier view taken in similar cases, the levy of penalty could not be sustained.

Conclusion: Penalty under section 271(1)(c) was not leviable, and the revenue's appeals failed.

Ratio Decidendi: Where the taxability of an amount is debatable and the assessee's stand is bonafide, absence of concealment of income or furnishing of inaccurate particulars precludes penalty under section 271(1)(c).

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