Penalty for interest income addition requires more than an unsustained taxability claim; a plausible explanation may defeat section 271(1)(c).

Penalty under section 271(1)(c) is not automatic merely because an addition for interest income is sustained. Where the assessee's explanation is found plausible and nothing shows it to be false or incorrect, the issue of taxability remains distinct from concealment or furnishing of inaccurate particulars. The mere failure on the taxability question does not by itself establish the basis for penalty. On that reasoning, penalty under section 271(1)(c) was held not warranted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on the assessee in respect of the addition relating to interest income.

Analysis: The Tribunal had found that the assessee's explanation was plausible and there was nothing to indicate that the explanation was incorrect. The taxability of the interest income and the imposition of penalty were treated as distinct matters, and the mere failure on the taxability question did not by itself justify penalty.

Conclusion: Penalty under section 271(1)(c) was not warranted.

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