Penalty on depreciation claim denied where quantum disallowance alone did not establish concealment under income-tax law.

Penalty under section 271(1)(c) was considered for a charitable trust's depreciation claim on assets already treated as application of income. The analysis treated the claim as a possible double deduction, but emphasised that quantum disallowance and penalty proceedings are distinct and that a mere addition in assessment does not automatically establish concealment or inaccurate particulars. Section 11(6) was noted in the Revenue's stand, but the decisive point remained the absence of automatic penal consequence from the disallowance alone. On that basis, the penalty was deleted in favour of the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on the assessee for claiming depreciation in respect of assets already treated as application of income.

Analysis: The penalty arose from a quantum addition treating the depreciation claim as a double deduction in the case of a charitable trust. For assessment year 2015-16, the governing principle applied was that quantum proceedings and penalty proceedings are distinct, and a disallowance in quantum does not automatically attract penalty. The reference to section 11(6) was noted in the context of the Revenue's stand, but the decisive consideration remained the absence of automatic penal consequence merely because the claim was disallowed in assessment.

Conclusion: The penalty was deleted and the issue was decided in favour of the assessee.

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