Penalty for disallowed claims requires proof of concealment or inaccurate particulars, not merely a different assessment view.

Penalty under section 271(1)(c) of the Income-tax Act was not leviable on additions arising from disallowance of depreciation and section 14A disallowance because the assessment adjustments did not show concealment of income or furnishing of inaccurate particulars. The section 14A issue was treated as a legal question, and the assessee had made a suo motu disallowance in the return. A mere rejection of the claim, or the adoption of a different quantum view, was held insufficient to sustain penalty where the relevant particulars were disclosed and the claim was not found false. The deletion of penalty was upheld.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on additions relating to disallowance of depreciation expenses and disallowance under section 14A of the Income-tax Act, 1961.

Analysis: The penalty was deleted because the additions arose from disallowances that did not establish concealment of income or furnishing of inaccurate particulars. The disallowance under section 14A was treated as a legal issue, and the assessee had itself made a suo motu disallowance in the return. A mere rejection of a claim or acceptance of a different view on the quantum of disallowance does not by itself justify penalty under section 271(1)(c), especially where the relevant particulars were disclosed and the claim was not found to be false.

Conclusion: Penalty under section 271(1)(c) was not leviable and its deletion was upheld.

Final Conclusion: The Revenue's challenge to the deletion of penalty failed, and the penalty proceedings did not survive on the assessed additions.

Ratio Decidendi: A claim that is disallowed in assessment, without proof of concealment of income or furnishing of inaccurate particulars, does not attract penalty under section 271(1)(c) of the Income-tax Act, 1961.

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