Debatable quantum addition bars concealment penalty where the High Court has admitted the underlying tax appeal.

Penalty under Section 271(1)(c) of the Income-tax Act was not leviable because the quantum addition had already been admitted by the High Court on substantial questions of law, showing that the addition had not attained finality and remained debatable. On that footing, concealment of income or furnishing of inaccurate particulars could not be treated as established merely from the pending quantum dispute. The deletion of penalty was therefore upheld.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was leviable where the quantum appeal had been admitted by the High Court and the addition was therefore debatable.

Analysis: The admission of the quantum appeals by the High Court and the framing of substantial questions of law showed that the sustainability of the addition had not attained finality. In such a situation, the issue ceased to be clear-cut and became debatable. Penalty under Section 271(1)(c) can be sustained only where concealment of material particulars or furnishing of inaccurate particulars is established, and not where the underlying addition itself remains open to serious judicial scrutiny. The reasoning was consistent with the jurisdictional High Court decisions relied upon, which treat admission of a substantial question of law as a circumstance indicating that penalty is not warranted.

Conclusion: The deletion of penalty was upheld and the revenue's challenge failed.

Ratio Decidendi: Where a quantum addition is pending in appeal before the High Court on substantial questions of law, the addition is treated as debatable and penalty for concealment or furnishing inaccurate particulars under Section 271(1)(c) of the Income-tax Act, 1961 is not leviable.

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