Penalty for inaccurate particulars fails where a trust's expense claim is disallowed without concealment of income.

Mere disallowance of an expense claim made on the basis of the return and accounts, without concealment of income or furnishing of inaccurate particulars, does not attract penalty under section 271(1)(c) of the Income-tax Act, 1961. Where a trust's claimed expenditure toward its objects was disallowed after denial of exemption under section 11, the resulting addition was treated as a claim-related adjustment rather than suppression of income, so the penalty was not sustainable and was cancelled.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee's claim for expenses towards the objects of the trust had been disallowed and the resultant addition did not amount to concealment of income or furnishing of inaccurate particulars.

Analysis: The addition arose from disallowance of expenses claimed by the trust after denial of exemption under section 11. The disallowance was held to relate to a claim made on the basis of the assessee's return and accounts, and not to any suppression of income or false particulars. On the facts, the materials did not bring the case within the mischief of section 271(1)(c).

Conclusion: The penalty was not leviable and the levy confirmed by the first appellate authority was cancelled.

Final Conclusion: The assessee's appeal succeeded and the penalty order did not survive.

Ratio Decidendi: Mere disallowance of an expense claim, without concealment of income or furnishing of inaccurate particulars, does not justify penalty under section 271(1)(c) of the Income-tax Act, 1961.

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