Penalty for disputed 80IC deduction fails where full disclosure was made and the issue was debatable on law.

Penalty under section 271(1)(c) was held unsustainable where the assessee had disclosed all material particulars and the dispute related only to the correct extent of deduction under section 80IC. The claim for higher deduction on the basis of substantial expansion was supported by the audit report, past allowance of deduction, and a view favourable to the assessee in similar proceedings, showing that the issue was debatable and turned on interpretation of law. Mere disallowance of the deduction did not amount to concealment or furnishing of inaccurate particulars because no false or erroneous particulars in the return were identified. The penalty was therefore cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee claimed higher deduction under section 80IC on the basis of substantial expansion and the claim was ultimately disallowed on interpretation of law.

Analysis: The assessee had disclosed all material particulars in the return and before the Assessing Officer. The dispute concerned only the correct extent of deduction under section 80IC, namely whether the assessee was entitled to 100% deduction or only 25% in the relevant year. The claim was supported by audit report, past allowance of deduction, and a view favourable to the assessee in similar proceedings, showing that the issue was debatable and arose from interpretation of the provision. Mere disallowance of the claim did not establish concealment or furnishing of inaccurate particulars, because there was no finding that any particulars supplied in the return were false or erroneous.

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

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