Penalty under section 271(1)(c) fails where no tax sought to be evaded exists and no addition survives

Penalty under section 271(1)(c) requires concealment of income or furnishing of inaccurate particulars together with tax sought to be evaded. On the facts recorded, that element was absent because no concealed income was brought to tax and no addition survived in the assessment. The dispute arose only from a mismatch between the return of income and the tax audit report. The penalty was therefore not leviable and was deleted, with relief granted to the assessee.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was sustainable in the absence of tax sought to be evaded and where the assessment order did not result in any addition.

Analysis: Penalty under section 271(1)(c) is attracted only where there is concealment of income or furnishing of inaccurate particulars, coupled with an element of tax sought to be evaded. On the facts recorded, the component of tax sought to be evaded was absent. The dispute arose from the difference between the figures shown in the return of income and the tax audit report, but no concealed income was brought to tax and no addition survived in the assessment.

Conclusion: The penalty was not leviable and was deleted. The appeal was allowed in favour of the assessee.

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