Penalty for non-reporting capital gains failed where full disclosure existed and taxability year was genuinely debatable.

Penalty under section 271(1)(c) was not leviable where the assessee had disclosed the material facts in the return and notes to accounts, and the Assessing Officer had taken cognizance of those disclosures. The dispute concerned the year in which capital gains on the land transfer became taxable, a question dependent on the memorandum of understanding and the point of transfer, and the matter was already the subject of quantum litigation. Because the assessee had later offered the capital gains in another assessment year and the issue was debatable, the addition reflected only a difference of opinion on tax incidence, not concealment or furnishing of inaccurate particulars. The penalty was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable for not offering capital gains to tax in the year under consideration when the assessee had disclosed the material facts and had already offered the capital gains in a later assessment year.

Analysis: The material facts relating to the transfer dispute were disclosed in the return and notes to accounts, and the Assessing Officer had taken cognizance of those disclosures. The dispute turned on the year in which capital gains on the land transfer became taxable, which depended on the terms of the memorandum of understanding and the point of transfer. The earlier disclosure in the return for another assessment year, the continuing dispute over approval and release of land, and the fact that the issue was already the subject of quantum litigation showed that the controversy was debatable. On these facts, the addition represented a difference of opinion on incidence of tax rather than a conscious suppression of income or furnishing of false particulars.

Conclusion: Penalty was not leviable, as the assessee neither concealed particulars of income nor furnished inaccurate particulars of income.

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