Bona fide omission and disclosed audit facts bar penalty for inaccurate particulars where disallowance arose under tax deduction rules.

Penalty under section 271(1)(c) was held not leviable where the disallowance arose from section 40(a)(ia) and the assessee's failure to add back the amount in the return was an admitted bona fide oversight. The audit report had disclosed the non-deduction of tax at source, and the record did not show concealment of income or furnishing of inaccurate particulars. An inadvertent error or bona fide claim, without suppression of material facts, does not justify penalty; the penalty was directed to be deleted.

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Issues: Whether penalty under section 271(1)(c) was leviable on the disallowance made under section 40(a)(ia) where the assessee had not added back the amount in the return due to an admitted oversight.

Analysis: The audit report disclosed the non-deduction of tax at source, and the assessee accepted that the omission to add back the disallowance in the return was a bona fide mistake. On these facts, the case did not disclose concealment of income or furnishing of inaccurate particulars. A bona fide claim or inadvertent error, without suppression of facts, does not attract penalty.

Conclusion: Penalty under section 271(1)(c) was not leviable and was directed to be deleted.

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