Penalty for debatable deemed dividend issue not sustainable where relevant facts were disclosed and no concealment was shown.

Penalty under section 271(1)(c) was held unsustainable where the addition depended on a genuinely debatable question as to in whose hands deemed dividend under section 2(22)(e) was taxable. The loan transaction was disclosed in the books, and the same amount had first been treated as deemed dividend in one company's hands before being taxed in the assessee's hands on appellate directions. On those facts, concealment of income or furnishing of inaccurate particulars was not established, so deletion of the penalty was upheld and the Revenue's challenge failed.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the addition arose from a debatable question as to in whose hands deemed dividend under section 2(22)(e) was taxable.

Analysis: The loan transaction was reflected in the books of account, and the amount had initially been treated as deemed dividend in the hands of one company before being brought to tax in the hands of the assessee on appellate directions. The point in dispute was therefore the proper person in whose hands the addition was to be made. Such a question was held to be highly debatable at the relevant time, and on these facts no concealment of income or furnishing of inaccurate particulars was established.

Conclusion: Penalty under section 271(1)(c) was not justified and its deletion was upheld, in favour of the assessee.

Final Conclusion: The Revenue's appeals failed, and the penalty deletion remained undisturbed because the underlying tax issue was held to be debatable rather than indicative of concealment or inaccurate particulars.

Ratio Decidendi: A penalty for concealment or furnishing inaccurate particulars cannot be sustained where the addition turns on a genuinely debatable issue and the relevant facts were disclosed.

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