Bona fide mistake and no intent to conceal income justified deletion of penalty under tax law.

Penalty under section 271(1)(c) was deleted because the assessee's omission to offer the reimbursed amount was found to be an inadvertent bona fide mistake, not a deliberate attempt to conceal income or evade tax. Once queried in assessment, the amount was immediately offered for taxation for all years, and the Tribunal recorded detailed factual reasons supporting absence of fraudulent intent. The High Court treated that finding as a reasonable exercise of discretion based on appreciation of facts and upheld the deletion of penalty, resulting in dismissal of the Revenue's appeals.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was rightly deleted on the ground that the assessee had acted under a bona fide mistake and had no intention to evade tax.

Analysis: The assessee had not initially offered the reimbursed amount to tax under a bona fide belief that it was not taxable, but upon being queried during assessment, the amount was immediately offered for taxation for all the years. The Tribunal recorded detailed reasons that the omission was inadvertent and that there was no intention to conceal income or evade tax. The finding rested on appreciation of facts and the exercise of discretion by the Tribunal was held to be reasonable.

Conclusion: The deletion of penalty under section 271(1)(c) was upheld and the appeals filed by the Revenue were dismissed.

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