Full disclosure defeats concealment penalty where a deduction claim is disallowed only as legally unsustainable.

Penalty was not leviable where the assessee fully disclosed the deduction claim, supporting particulars in the return, tax audit report and computation of income, and the disallowance arose only from the legal treatment of payments under section 43B. A mere rejection of a legal claim does not, by itself, establish concealment of income or furnishing of inaccurate particulars when the underlying facts are true and complete. On that basis, the penalty under section 271(1)(c) was deleted and the Revenue's challenge failed.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee's claim for deduction under section 43B was disallowed, but the relevant particulars were disclosed in the return, tax audit report, and computation of income.

Analysis: The assessee had disclosed the claim in full and had furnished the supporting particulars in the tax audit report and return. The disallowance arose from the legal treatment of payments made after the due date under section 43B, not from any false entry, suppression of facts, or incorrect particulars. A mere rejection of a legal claim does not, by itself, amount to concealment or furnishing inaccurate particulars when the underlying facts are fully and truly disclosed. The decision followed the principle that penalty is not attracted merely because a claim made in the return is not accepted in assessment.

Conclusion: Penalty under section 271(1)(c) was not leviable. The deletion of penalty was upheld and the appeal failed.

Final Conclusion: The penalty order was sustained to be deleted, resulting in rejection of the Revenue's challenge.

Ratio Decidendi: Where all primary facts are fully disclosed, disallowance of a claim under section 43B does not amount to concealment of income or furnishing inaccurate particulars, and penalty under section 271(1)(c) cannot be imposed merely because the claim is legally unsustainable.

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