Bona fide, debatable tax claim defeats penalty where disallowance alone does not prove concealment or inaccurate particulars.

Penalty under section 271(1)(c) was held not exigible where the assessee claimed deduction under section 80IB on export incentives and related receipts on a legal view later disapproved. The claim was treated as debatable and bona fide, and the disallowance in assessment did not, by itself, establish concealment of income or furnishing of inaccurate particulars. A merely incorrect claim, without proof that it was false or mala fide, does not attract penalty; the deletion of penalty was sustained in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable for the assessee's claim of deduction under section 80IB on export incentives and related receipts.

Analysis: The claim for deduction had been made on the basis of a legal position that was later disapproved, but the issue was treated as debatable and the claim as bona fide. The denial of deduction in assessment did not, by itself, establish concealment of income or furnishing of inaccurate particulars. A mere incorrect claim, without more, does not attract penalty where the claim is not shown to be false or mala fide.

Conclusion: Penalty under section 271(1)(c) was not exigible, and the deletion of penalty was sustained in favour of the assessee.

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