Penalty for inaccurate particulars fails where income reclassification does not increase taxable income or show tax evasion.

Penalty under section 271(1)(c) was not sustainable where reclassification of warehouse rental income from business income to income from house property did not increase taxable income. The assessed loss remained higher than the returned loss, so the adjustment did not create any tax liability or demonstrate concealment or furnishing of inaccurate particulars with intent to evade tax. In the absence of any addition to taxable income or other material showing tax evasion, the foundational requirement for levy of penalty was missing, and the penalty was rightly cancelled.

---

---

Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee's returned loss was lower than the assessed loss and the disputed treatment of rental income resulted in no tax evasion.

Analysis: The penalty provision applies only where concealment of income or furnishing of inaccurate particulars results in an attempt to evade tax. On the facts, the reclassification of warehouse rental income from business income to income from house property did not increase the assessee's total income; the assessed loss was in fact higher than the returned loss. Since the adjustment did not create any taxable income over and above the returned position, the foundational requirement for penalty was absent.

Conclusion: Penalty under section 271(1)(c) was not exigible and was rightly cancelled.

Final Conclusion: The assessee succeeded because the impugned penalty could not be sustained in the absence of any tax evasion or resulting addition to taxable income.

Ratio Decidendi: Penalty for concealment or furnishing inaccurate particulars cannot be sustained where the reassessment does not enhance taxable income and the assessee's assessed loss remains lower than the returned loss, as no tax evasion is established.

---