Penalty for inaccurate particulars fails where a disclosed claim is only disallowed and no concealment is proved.

Penalty under the Income-tax Act for concealment or furnishing inaccurate particulars cannot be sustained where the assessee disclosed the relevant claims and supporting particulars, and no falsehood, inaccuracy, or lack of bona fides was found. A mere disallowance of an expenditure claim in assessment does not, by itself, establish concealment or attract penalty. On the disclosed record, the penalty basis failed because the Revenue did not show that the explanation was false or that material particulars had been withheld.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was sustainable in respect of the disallowances in question when the assessee had disclosed the relevant particulars and there was no finding of concealment, falsity, or inaccuracy.

Analysis: The penalty provisions apply only where there is concealment of income or furnishing of inaccurate particulars. The record showed that the assessee had disclosed the claims and supporting particulars, and the findings of the first appellate authority that the expenses were actually incurred and the particulars were correct were not displaced by the Tribunal. A mere rejection of a claim, or the fact that a claim is ultimately found unsustainable in law, does not by itself establish concealment or inaccurate particulars. The absence of any finding that the explanation was false or not bona fide was decisive.

Conclusion: Penalty under Section 271(1)(c) was not exigible on the disputed items, and the additions made as the basis of penalty could not sustain the levy.

Ratio Decidendi: A penalty under Section 271(1)(c) cannot be imposed unless the Revenue establishes concealment of material particulars or furnishing of inaccurate particulars; a bona fide claim that is merely disallowed in assessment does not, by itself, attract penalty.

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