Penalty for concealment sustained where a bogus weighted deduction claim was withdrawn only after reopening and detection.

Penalty under section 271(1)(c) was sustained because the assessee's weighted deduction claim under section 35(1)(ii) was found to rest on a bogus deduction arrangement. Withdrawal of the claim after notice under section 148 was not treated as voluntary or bona fide, since no revised return was filed before detection and the surrender followed reopening proceedings. The Tribunal applied the principle that surrender after detection does not erase concealment, and held the assessee's reliance on other cases to be distinguishable.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee had claimed weighted deduction under section 35(1)(ii) of the Income-tax Act, 1961 and withdrew the claim only after notice under section 148 of the Income-tax Act, 1961.

Analysis: The assessee's original claim was found to be based on a bogus deduction arrangement. The subsequent surrender was made only after reopening proceedings had commenced and was not treated as a voluntary or bona fide disclosure. The Tribunal held that the time gap between the original assessment and the return filed in response to notice under section 148, together with the absence of any revised return before detection, showed that the surrender was compelled by departmental action. The reliance placed on other decisions was held to be distinguishable, and the ratio that surrender after detection does not wash away concealment was applied.

Conclusion: Penalty under section 271(1)(c) was rightly sustained and the assessee's challenge failed.

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