Penalty for embezzlement-loss claims deleted where disallowance was not shown to be false or inaccurate on the record.

Penalty under section 271(1)(c) was held not leviable where the assessee's embezzlement-loss claim had only been partly disallowed in quantum proceedings. For assessment year 1991-92, the record did not conclusively show actual receipt of the alleged repayment, and for 1999-2000 the assessee conceded only a small portion while maintaining that the remaining claim was supported by bank records. As the Revenue did not establish that the claims were false or wholly untenable, concealment or furnishing of inaccurate particulars was not made out, and the penalty was deleted for both years.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable in respect of the assessee's claim of embezzlement loss for assessment years 1991-92 and 1999-2000.

Analysis: The penalty arose from disallowance of a small part of the assessee's embezzlement-loss claim in each year after substantial relief had already been granted in the quantum proceedings. For assessment year 1991-92, the assessee showed that the alleged repayment of Rs. 40,000 was not reflected in its bank statement, and the Revenue's reliance on the other party's bank account did not conclusively establish actual receipt by the assessee. For assessment year 1999-2000, the assessee admitted mistake only for Rs. 50,000, while maintaining that the claim for Rs. 2,65,000 was supported by its bank records and was not disproved by the Revenue. On these facts, the disallowed claims were not shown to be false or wholly untenable so as to attract concealment or furnishing of inaccurate particulars.

Conclusion: Penalty under section 271(1)(c) was not leviable on the disallowed embezzlement-loss claims; the penalty was deleted for both assessment years.

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