Penalty u/s 271(1)(c) was imposed as the assessee did not make...

Penalty u/s 271(1)(c) was imposed as the assessee did not make disallowance u/s 14A or compute income for administrative/indirect common expenses incurred in relation to earning exempt income. The court held that making an incorrect claim in law cannot amount to furnishing inaccurate particulars. The assessee maintained separate books, investments were from own capital, interest payments were for business, and direct expenditure for exempt income was debited to personal accounts. No information in the return was found incorrect or inaccurate. The case was covered by the Supreme Court's judgment in CIT vs. Reliance Petro Products (P.) Ltd. and ITAT Delhi's decision in M/s. Mohair Investment and Trading Company (P.) Ltd., where the issue was debatable and penalty u/s 271(1)(c) was not sustainable. The revenue failed to show that the assessee concealed or furnished incorrect particulars of income.

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