Penalty for false exemption claim upheld where taxable capital gains were consciously concealed despite advance tax payment.

Penalty under Section 271(1)(c) is attracted where the assessee consciously suppresses taxable income or makes a false exemption claim, and a plea of bona fide belief or typographical error does not protect a deliberate attempt to evade tax. The assessee had disclosed the share sale transaction and paid advance tax, but later claimed exemption and refund; the non-disclosure of capital gains emerged only on scrutiny. The court treated the cited advance ruling as factually inapplicable because the surrounding circumstances were materially different, and upheld the penalty as justified.

---

---

Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was exigible where the assessee had disclosed the share sale transaction and paid advance tax, but claimed exemption on the basis of a purported bona fide belief and the computation contained an alleged typographical error.

Analysis: Penalty under Section 271(1)(c) depends on whether the omission or claim is inadvertent or represents a conscious attempt to conceal income or furnish inaccurate particulars. The assessee had paid advance tax on the capital gains, yet while filing the return sought exemption and refund. The Court found that the exemption claim was not a mere erroneous or typographical mistake, but a deliberate attempt to avoid tax, since the non-disclosure of capital gains came to light only on scrutiny. The advance ruling relied upon was treated as factually inapplicable because the transaction there involved different surrounding circumstances, including an employment relationship and a non-compete element, which were absent here.

Conclusion: Penalty under Section 271(1)(c) was justified and the assessee's claim of bona fide mistake was rejected.

Ratio Decidendi: A penalty under Section 271(1)(c) is attracted where the assessee consciously suppresses taxable income or makes a false exemption claim, and a claim of typographical error or bona fide belief will not protect a deliberate attempt to evade tax.

---