Penalty for inaccurate particulars not leviable where section 14A disallowance arose from disclosed facts and bona fide explanation.

Penalty under section 271(1)(c) was held not leviable where the assessee had disclosed the relevant investment, dividend income and interest expenditure details, and the disallowance under section 14A arose from computation on the material already on record. No false, incorrect, or erroneous particulars were found in the return. A claim that is not accepted in law, by itself, does not amount to concealment or furnishing inaccurate particulars when the explanation is supported by the record and is bona fide. The penalty was cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee had disclosed the relevant particulars, the disallowance under section 14A was made on the basis of the material already on record, and no incorrect or false particulars were found in the return.

Analysis: The assessee had furnished the relevant details regarding investment, dividend income and interest expenditure during assessment proceedings. The disallowance ultimately sustained was a consequence of the computation under section 14A and not of any suppression of primary facts. No material was brought to show that the return contained false, incorrect or erroneous particulars. A mere claim which is not accepted in law does not, by itself, amount to concealment or furnishing of inaccurate particulars, and the explanation offered by the assessee was supported by the record and was bona fide.

Conclusion: Penalty under section 271(1)(c) was not leviable and was cancelled; the assessee succeeded on the penalty issue.

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