Bona fide debatable depreciation claim defeats penalty when there is no concealment or inaccurate particulars.

Penalty under section 271(1)(c) cannot be sustained where the assessee's depreciation claim on leased assets is a bona fide, debatable legal claim. The claim had been consistently pursued in earlier years, had already been litigated repeatedly, and the allowability issue was pending before the High Court. On the facts, there was no finding of concealment of income or furnishing of inaccurate particulars. Accordingly, the penalty was held not exigible and was cancelled in favour of the assessee.

---

---

Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable in respect of the disallowance of depreciation on leased assets.

Analysis: The claim for depreciation on leased assets had been pursued consistently in earlier years and had already been the subject of repeated litigation. The issue on allowability of depreciation was pending consideration before the High Court and was treated as debatable. On the facts, there was no finding of concealment of income or furnishing of inaccurate particulars, and the claim was a legal claim advanced by the assessee.

Conclusion: Penalty under section 271(1)(c) was not exigible and was directed to be cancelled, in favour of the assessee.

Ratio Decidendi: Where the underlying claim is a bona fide, debatable legal claim and the record does not establish concealment of income or furnishing of inaccurate particulars, penalty under section 271(1)(c) cannot be sustained.

---