Validity of penalty imposed u/s 271(1)(c ) for disallowance of expenses u/s 35D

Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the Revenue, that by itself would not, in our opinion, attract the penalty under Section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the assessing officer for any reason, the assessee will invite penalty under Section 271(1)( c ) . That is clearly not the intendment of the legislature. In any event we are bound by the judgment of the Supreme Court in Please become a Premium member. If you are already a Premium member, login here to access the full content.