Penalty for TDS-related disallowance fails where facts were disclosed and the dispute was only about legal interpretation.

Penalty under section 271(1)(c) was not leviable where the underlying disallowance arose from non-deduction of tax at source on payments to non-residents. The dispute turned on the taxability of the payments, the applicability of the relevant DTAA, and whether the services constituted fees for technical services, making it a matter of legal interpretation rather than concealment or furnishing of inaccurate particulars. As the assessee had disclosed the relevant facts and supporting material, and mere non-challenge to the quantum addition did not establish culpable conduct, the addition-based penalty was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the underlying disallowance arose from non-deduction of tax at source on payments to non-residents under section 40(a)(i) of the Income-tax Act, 1961.

Analysis: The penalty was founded on disallowances made in assessment on account of non-deduction of tax at source on payments treated as relating to professional services and relocation or movers and packers services. The issue turned on the taxability of the payments in the hands of the non-resident recipients and the applicability of the relevant DTAA provisions, including whether the services constituted fee for technical services. The assessee had furnished the relevant facts and supporting material, and the dispute was one of legal interpretation and claim disallowance rather than concealment of income or furnishing of inaccurate particulars. Mere failure to challenge the quantum addition did not, by itself, establish acceptance of concealment or inaccurate particulars.

Conclusion: Penalty under section 271(1)(c) was not leviable and the addition-based penalty was deleted.

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