Penalty for concealment fails where property income dispute rests on ownership and taxability, not suppression of facts.

Penalty under section 271(1)(c) was not justified where the assessee's non-disclosure arose from a bona fide dispute over ownership and taxability of income from the residential portion of property. The assessee had maintained that the property income belonged in the hands of other HUF assessees, and the record did not show suppression of primary facts. Mere rejection of that position by the Department did not establish concealment, so cancellation of the penalty was upheld.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was justified on the allegation that the assessee had concealed income from the residential portion of the property.

Analysis: The assessee had disputed that the income from the residential portion belonged to it and had explained that the property income was being dealt with in the hands of other HUF assessees. The non-disclosure was therefore founded on a claim as to ownership and taxability, and not on suppression of primary facts. In such a situation, the mere fact that the Department did not accept the assessee's position did not by itself establish concealment of income.

Conclusion: Penalty under section 271(1)(c) was not leviable and the cancellation of penalty was upheld.

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