Penalty for inaccurate particulars needs positive proof of falsity, not merely an unproved explanation or withdrawn deduction claim.

Penalty under section 271(1)(c) is not justified where an assessee withdraws a deduction claim in a return filed after notice under section 148, but the record still lacks clinching material to show that the original claim was false or that the contribution was not genuine. An explanation that is merely unproved, and not disproved by surrounding material, may still be treated as bona fide. The governing point is that concealment or furnishing inaccurate particulars requires positive evidence of falsity, not only suspicion arising from an investigation report.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was exigible for the assessee's claim of deduction under section 35(1)(ii), which was withdrawn in the return filed in response to notice under section 148.

Analysis: The claim was originally made in the return, but the assessee withdrew it after the investigation report indicated irregularities in the recipient institution's activities. The record did not contain clinching material establishing that the assessee had made a false claim or that the contribution itself was not genuine. In these circumstances, the explanation offered by the assessee was treated as bona fide and, at the highest, unproved. An explanation that is unproved but not disproved does not justify penalty where the surrounding material does not lead to a positive inference of falsity.

Conclusion: Penalty under section 271(1)(c) was not sustainable and was deleted in favour of the assessee.

Ratio Decidendi: Penalty for concealment or furnishing inaccurate particulars cannot be imposed where the assessee's explanation is not disproved and the material on record does not conclusively establish a false claim.

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