Penalty for capital gains non-utilisation fails where full disclosure and bona fide conduct show no concealment.

Penalty under section 271(1)(c) is not attracted where the assessee fully disclosed the capital gains, deposited the sale proceeds in the Capital Gains Account Scheme within time, and the unutilised balance became taxable only because it was not deployed within the statutory period. Bona fide conduct, including prompt intimation to the department before reassessment and retention of the amount in the specified account, negates concealment of income or furnishing of inaccurate particulars. Mere failure to satisfy the time condition for exemption, without any diversion or suppression of facts, does not by itself justify penalty.

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Issues: Whether penalty under section 271(1)(c) was leviable where the assessee had disclosed the capital gains, deposited the sale consideration in the Capital Gains Account Scheme within time, failed to utilise the entire amount within the stipulated period due to circumstances beyond control, and voluntarily informed the department before reassessment that the unutilised amount had become taxable.

Analysis: The assessee had disclosed the capital gains arising from sale of property and had complied with the primary requirement of section 54(2) by depositing the amount in the Capital Gains Account Scheme. The shortfall in utilisation was attributable to disputes with the builder, and the unutilised amount remained in the specified account without being diverted for any other purpose. The assessee had suo motu informed the department about the expiry of the prescribed period and the resulting taxability before reassessment proceedings were initiated. On these facts, the conduct reflected bona fides and there was no material to show concealment of income or furnishing of inaccurate particulars. Penalty could not be sustained merely because the amount became taxable as a consequence of non-utilisation within time.

Conclusion: Penalty under section 271(1)(c) was not leviable and was directed to be deleted, in favour of the assessee.

Ratio Decidendi: Penalty for concealment cannot be imposed where the income and relevant facts were fully disclosed and the addition arises only from a legal consequence of non-compliance with a statutory time condition, absent concealment or inaccurate particulars.

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