Debatable tax claim and capital subsidy character did not justify penalty for concealment or inaccurate particulars.

Penalty under Section 271(1)(c) of the Income-tax Act, 1961 is not leviable where the assessee's claim is based on a debatable legal issue about the character of a sales tax exemption as capital or revenue receipt. The text states that the issue had already been treated as debatable in earlier proceedings involving the same assessee and similar assessments, and that an unsustainable claim does not by itself show concealment or furnishing of inaccurate particulars when the dispute concerns the legal nature of the receipt. On that basis, the assessee succeeded on the penalty question.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee claimed sales tax exemption as a capital subsidy on a debatable issue.

Analysis: The claim turned on the character of the sales tax exemption, namely whether it was capital or revenue in nature. The issue had already been treated as debatable in earlier proceedings concerning the same assessee and similar assessments. A claim which is not accepted in law does not by itself establish concealment or furnishing of inaccurate particulars when the dispute is only about the legal character of a receipt.

Conclusion: Penalty under Section 271(1)(c) was not leviable and the assessee was entitled to succeed on the penalty issue.

Ratio Decidendi: Mere making of a claim that is ultimately not accepted, when the issue is debatable, does not amount to concealment or furnishing of inaccurate particulars for the purpose of penalty under Section 271(1)(c) of the Income-tax Act, 1961.

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