Penalty under Section 271(1)(c) failed where factual findings showed no inaccurate particulars and no substantial question of law arose.

Penalty under Section 271(1)(c) of the Income-tax Act was not sustainable because the Tribunal, on the material before it, found no incorrect or erroneous particulars and accepted that the expenditure arose in the course of a restructuring scheme rather than to secure a tax advantage. The High Court noted that the Assessing Officer's observations, read as a whole, could support an inference of inaccuracy, but the Tribunal's factual findings were supported by the record and showed that the case did not fall within the penal provision. No substantial question of law arose, and the appeal was dismissed.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was sustainable on the facts found by the Tribunal and whether any substantial question of law arose.

Analysis: The Tribunal had found that the assessee's case did not warrant penalty, as there was no finding that the particulars furnished were incorrect or erroneous. It further held that the expenditure was incurred in the context of a restructuring scheme and not with the object of obtaining a tax advantage. The Court found that the Assessing Officer's observations, read as a whole, supported the inference that the particulars were inaccurate, but the Tribunal's factual findings were rendered after examining the matter on all relevant aspects and were supported by the record.

Conclusion: Penalty under Section 271(1)(c) was not justified on the facts, and no substantial question of law arose.

Final Conclusion: The appeal failed and stood dismissed.

Ratio Decidendi: A penalty under Section 271(1)(c) cannot be sustained where the fact-finding authority concludes, on the material before it, that the case does not fall within the penal provision and the issue does not raise any substantial question of law.

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