Bona fide deduction claim on disclosed facts bars concealment penalty when no inaccurate particulars are shown.

Penalty under section 271(1)(c) was held not leviable where the assessee had disclosed all material facts in the return of income and the interest claim arose from a bona fide dispute on deductibility. The withdrawals were reflected in the partner's capital account, and the record showed no concealment of income or furnishing of inaccurate particulars. The disallowance was treated as an assessment issue rather than evidence of deliberate default, so the penalty was cancelled 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 on disallowance of interest claimed as deduction when the relevant facts were disclosed in the return of income.

Analysis: The material facts relating to the claim were disclosed in the return of income and the withdrawals were reflected in the partner's capital account. The disallowance arose from a claim for deduction of interest and was in the nature of an assessment dispute over allowability of expenditure. On the record, there was no material to show concealment of income or filing of inaccurate particulars. The claim was not found to be without basis and the dispute was treated as a bona fide difference of opinion between the assessee and the Revenue.

Conclusion: Penalty under section 271(1)(c) was not leviable and was cancelled, in favour of the assessee.

Ratio Decidendi: Where a disallowed deduction is claimed on disclosed facts and the assessee's explanation is bona fide, penalty for concealment or furnishing inaccurate particulars cannot be sustained.

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