Bona fide disclosure defeats concealment penalty where an incorrect bad-debt claim arose from a calculation error.

Penalty for concealment was not leviable where the assessee made a bona fide claim for provision for bad and doubtful debts and fully disclosed the relevant facts in the financial statements, return and tax audit material. The excess claim arose from a calculation error in applying prudential and RBI norms, and the mere disallowance of the claim did not establish concealment or furnishing of inaccurate particulars. An incorrect claim, by itself, is insufficient for penalty when the underlying facts are disclosed and the claim is made honestly. Penalty was deleted.

---

---

Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable where the assessee had claimed provision for bad and doubtful debts on a bona fide basis with full disclosure, but the claim was disallowed in assessment.

Analysis: The assessee had disclosed the claim in the financial statements, return of income and tax audit material. The excess claim arose from a calculation issue in working out the provision under the bank's prudential/RBI norms, and the disallowance did not establish concealment or furnishing of inaccurate particulars. An incorrect claim, by itself, does not attract penalty when the facts are fully disclosed and the claim is made bona fide.

Conclusion: Penalty was not sustainable and was deleted in favour of the assessee.

---