Mere disallowance of expenses u/s 40A(3) would not invite...

Mere disallowance of expenses u/s 40A(3) would not invite penalty for concealing or furnishing inaccurate particulars of income. Assessee disclosed all particulars relating to payments in violation of Section 40A(3) in Tax Audit Report filed with return. Assessee harboured bona fide belief that payments fell under exceptions in Rule 6DD. Revenue did not dispute explanation furnished by assessee. There was no concealment of particulars of income relating to Section 40A(3) payments. Disallowing loading and unloading expenses was mere ad-hoc disallowance, not based on finding of bogus expenses claimed. Expenses were not fully verifiable due to nature of payments made to small workers in cash on self-made vouchers. Such ad-hoc disallowances do not attract penalty. Penalty u/s 271(1)(c) cannot be levied on assessee.