Penalty under Section 271(1)(c) not sustainable where bona fide belief in pending registration negates culpable concealment.

Penalty under the Income-tax Act for concealment or furnishing inaccurate particulars requires culpable intent; where a trust had applied for registration, communicated with the department about deed amendments, and treated surplus grants and interest as remittable to the government based on a bona fide belief while returns recorded registration as "applied for", the facts did not establish deliberate concealment or inaccurate particulars. Consequently the penalty under the Act was deleted for the assessment years in question, despite substantive additions being sustained on limitation grounds.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 can be levied on the assessee for assessment years 2007-08, 2008-09 and 2009-10 for alleged concealment or furnishing of inaccurate particulars of income.

Analysis: The records show that the assessee applied for registration under Section 12A on 18.12.2006 and the department requested amendment of the trust deed before considering the application; registration was ultimately granted w.e.f. assessment year 2009-10. Returns for the earlier years declared registration as "Applied for". The assessee asserted a bona fide belief that registration was pending and that surplus grants and interest were to be remitted to the Government and therefore were not treated as its taxable income. While additions were made by the Assessing Officer and sustained on limitation grounds, the factual matrix indicates absence of deliberate concealment or intent to furnish inaccurate particulars regarding the charitable status or treatment of grants and interest. The penalty provisions require culpable concealment or furnishing of inaccurate particulars; given the application for registration, departmental communication seeking amendments, and the assessee's stated treatment of grants/interest, the facts do not satisfy the threshold for invoking Section 271(1)(c).

Conclusion: Penalty under Section 271(1)(c) of the Income-tax Act, 1961 is deleted for assessment years 2007-08, 2008-09 and 2009-10; decision rendered in favour of the assessee.

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