Penalty for inaccurate particulars fails where claim was disclosed and AIR/26AS mismatch was insignificant.

Penalty under section 271(1)(c) was considered unsustainable where the assessee had disclosed the relevant particulars in the tax audit report and return, and the disallowance under section 43B arose only because the claim was not accepted in assessment. Mere rejection of a claim did not establish concealment of income or furnishing of inaccurate particulars. The minor mismatch between the return figures and AIR/26AS information was treated as insignificant, and no mala fide or contumacious conduct was found. On that basis, the penalty was deleted 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 in respect of the disallowance under section 43B and the minor mismatch between the income shown in the return and the AIR/26AS information.

Analysis: The assessee had disclosed the relevant particulars in the tax audit report and return proceedings. The disallowance arose from a claim that was not accepted in assessment, but the mere rejection of a claim does not by itself establish concealment of income or furnishing of inaccurate particulars. The minor difference reflected in the AIR/26AS reconciliation was also found to be insignificant. In the absence of mala fide or contumacious conduct, the conditions for penalty were not satisfied.

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

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