Penalty for duty drawback mismatch deleted where disclosed accounting basis did not show concealment or inaccurate particulars.

Penalty under section 271(1)(c) was held unsustainable where the assessee, following the mercantile system of accounting, had accounted only the duty drawback actually received and treated the balance as not received during the year. The difference between the accounts and Form 26AS did not, on these facts, show concealment of income or furnishing of inaccurate particulars because the relevant particulars were disclosed and the receipt was recorded on the basis adopted in the books. A mere addition arising from this mismatch was therefore insufficient to attract penalty, and the penalty was directed to be deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee, following the mercantile system of accounting, had accounted only the duty drawback actually received and the balance was treated as not received during the year.

Analysis: The addition arose from a difference between the duty drawback credited in the accounts and the amount reflected in Form 26AS. The assessee had disclosed the relevant particulars and had accounted the receipt on the basis followed in its books. On these facts, the non-received portion of the duty drawback did not establish concealment of income or furnishing of inaccurate particulars. Since the penalty provision requires a clear finding of concealment or inaccurate particulars, the mere disallowance or addition on this issue did not justify penalty.

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

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