Concealment penalty sustained for untenable exemption claim and refund request on omitted share-sale income.

Penalty under Section 271(1)(c) was found justified where the assessee did not disclose part of the share-sale receipt as taxable income, claimed exemption, and sought a refund on that basis. The Court distinguished a mere dispute over the head of income from conduct showing concealment: the exemption claim had no legally sustainable foundation, and the omission surfaced only on scrutiny. On those facts, the return was treated as furnishing inaccurate particulars with an intent to evade tax, rather than a bona fide classification error, and the penalty was sustained.

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Issues: Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 was sustainable where the assessee had not disclosed the receipt as taxable income, claimed exemption, and sought refund, but asserted that the claim was made under a bona fide belief and that the dispute related only to the head of income.

Analysis: The assessee had sold shares to a foreign company under an agreement providing for part payment in lump sum and the balance in instalments. Although advance tax was paid on part of the receipt, the subsequent amount was not offered as taxable income in the returns and was instead claimed as exempt, with a consequential refund claim. The suppression came to light only on scrutiny. The Court held that the absence of a legally sustainable basis for exemption, coupled with the claim of refund on the footing of exemption, showed an intention to evade tax rather than a mere difference on the head of income. The factual distinction from the advance ruling relied upon by the assessee was accepted, and the penalty proceedings were held to be justified.

Conclusion: The levy of penalty under Section 271(1)(c) was upheld; the assessee's challenge failed.

Ratio Decidendi: A penalty for concealment is attracted where the return omits taxable income and asserts an untenable exemption with a consequential refund claim, as such conduct evidences furnishing of inaccurate particulars and an intent to evade tax rather than a bona fide mistake on classification of income.

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