Debatable deduction claim defeats concealment penalty where the assessee adopted one plausible view without inaccurate particulars.

An 850-day delay in filing the first appeal was condoned because the assessee explained that the order had remained with an accountant who left without informing the partners, and the record showed the related quantum dispute was already in appellate litigation, including before the Supreme Court; the delay was therefore treated as not mala fide and was excused in the interest of substantial justice. Penalty under section 271(1)(c) was deleted because the disallowance linked to deduction under section 80IB(10) involved a debatable issue on which judicial views had differed, so adopting one possible view did not by itself establish concealment or furnishing of inaccurate particulars.

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Issues: (i) Whether the delay of 850 days in filing the appeal before the first appellate authority deserved condonation. (ii) Whether penalty under section 271(1)(c) was leviable on the assessee for the disallowance linked to deduction under section 80IB(10).

Issue (i): Whether the delay of 850 days in filing the appeal before the first appellate authority deserved condonation.

Analysis: The delay was explained on the ground that the penalty order had remained with an accountant who later left without informing the partners, and the assessee claimed to have learnt of the order only when recovery steps commenced. The record showed that the related quantum issue had travelled through appellate stages and was pending before the Supreme Court. In these circumstances, the assessee's failure to prosecute the first appeal could not be treated as mala fide, and the delay was viewed as deserving a liberal approach in the interest of substantial justice.

Conclusion: The delay was condoned.

Issue (ii): Whether penalty under section 271(1)(c) was leviable on the assessee for the disallowance linked to deduction under section 80IB(10).

Analysis: The penalty arose from disallowance of deduction under section 80IB(10), an issue on which different judicial authorities had taken divergent views in the assessee's own case for an earlier assessment year. The existence of conflicting views showed that the matter was debatable. A claim that is unsustainable on one view of law does not by itself amount to concealment of income or furnishing of inaccurate particulars when the assessee has adopted one of the possible views. On that basis, the essential ingredients for penalty were not established.

Conclusion: Penalty under section 271(1)(c) was not leviable and was directed to be deleted.

Final Conclusion: The assessee succeeded on both the delay issue and the penalty issue, and the penalty demand was set aside.

Ratio Decidendi: Penalty under section 271(1)(c) cannot be sustained where the addition rests on a debatable issue and the assessee has taken one of two possible views without concealment or furnishing of inaccurate particulars.

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