Capital gains taxation failure bars concealment penalty where no taxable accrual arose from the development agreement.

Penalty under section 271(1)(c) was held unsustainable because the disputed amount was not taxable as capital gains on the facts already covered by the earlier ruling on the same development-agreement transaction. The Court applied its prior reasoning that, without a registered agreement meeting the requirements of section 53A of the Transfer of Property Act, section 2(47)(v) of the Income-tax Act did not treat the entire consideration as accrued or taxable in the relevant year. As no capital gains were exigible on the unrealized amount, the basis for alleging concealment or furnishing inaccurate particulars was absent.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable when the disputed amount was held not to give rise to taxable capital gains on the facts already covered by the earlier decision.

Analysis: The Court applied its earlier ruling on the same development-agreement transaction and held that, in the absence of a registered agreement satisfying the requirements of section 53A of the Transfer of Property Act, 1882, section 2(47)(v) of the Income-tax Act, 1961 did not operate to treat the entire consideration as accrued or taxable in the relevant year. Since no capital gains were exigible on the unrealized amount, the foundation for alleging concealment or furnishing of inaccurate particulars was absent.

Conclusion: The penalty was not sustainable and the challenge by the revenue failed.

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