Penalty under section 271(1)(c) fails where full disclosure is made and only the legal sustainability of the claim is disputed.

Penalty under section 271(1)(c) was held unsustainable where the assessee had fully disclosed the material facts and the dispute concerned only the legal acceptability of the claim. For the reimbursement of expenses received from the parent company, the addition arose from the assessee's own disclosure and revised computation, with no indication of detection by the Assessing Officer, so concealment or inaccurate particulars was not established. For the long-term capital loss claim based on an agreement to sell land, the underlying transaction was fully disclosed and the issue was whether the claim was legally allowable, not whether facts were concealed. A disallowed claim in quantum proceedings did not, by itself, justify penalty.

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Issues: (i) Whether penalty under section 271(1)(c) was exigible on the addition relating to reimbursement of expenses received from the parent company. (ii) Whether penalty under section 271(1)(c) was exigible on the claim of long-term capital loss arising from the agreement to sell the land.

Issue (i): Whether penalty under section 271(1)(c) was exigible on the addition relating to reimbursement of expenses received from the parent company.

Analysis: The addition was made on the basis of the assessee's own letter and revised computation, and there was no material to show that the disclosure was the result of any detection by the Assessing Officer. The amount was otherwise reflected in the subsequent year's accounts and return, and the record did not establish concealment or furnishing of inaccurate particulars in relation to this item.

Conclusion: Penalty was not exigible on the reimbursement of expenses addition, and the assessee succeeded on this issue.

Issue (ii): Whether penalty under section 271(1)(c) was exigible on the claim of long-term capital loss arising from the agreement to sell the land.

Analysis: The claim was made on the basis of an agreement to sell, receipt of consideration through banking channels, and other disclosed documents. Although the quantum addition was sustained because the transfer was not accepted in law on the facts, the penalty issue required independent examination. The record showed full disclosure of the transaction and the dispute turned on the legal sustainability of the claim rather than concealment of primary facts. A wrong claim, by itself, did not establish concealment or inaccurate particulars where the underlying facts were disclosed and the claim was advanced as a bona fide position.

Conclusion: Penalty was not exigible on the long-term capital loss addition, and the assessee succeeded on this issue.

Final Conclusion: The quantum addition was sustained, but the penalty imposed under section 271(1)(c) was held unsustainable on both counts.

Ratio Decidendi: A penalty for concealment or furnishing of inaccurate particulars cannot be sustained where the material facts were fully disclosed and the controversy is confined to the legal acceptability of the claim, even if the claim is disallowed in quantum proceedings.

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