Tax compliance in India requires accurate disclosure of income, deductions, and taxes payable. Failure to do so may attract penalties under various provisions. Among them, Section 271(1)(c) was historically one of the most litigated. However, in many cases, taxpayers have been able to successfully challenge penalties where the alleged concealment was unintentional or due to genuine errors.

What is Section 271(1)(c)?
Section 271(1)(c) authorized the Assessing Officer (AO), Commissioner (Appeals), or Principal Commissioner to levy a penalty if a person has:
Concealed the particulars of income, or
Furnished inaccurate particulars of such income.
This penalty could range from 100% to 300% of the tax sought to be evaded.

📝 Note: This section has now been largely replaced by Section 270A from AY 2017-18 onwards, which deals with under-reporting and misreporting of income. But older cases may still refer to 271(1)(c).

How is the Penalty Calculated?
Penalty = Tax sought to be evaded × Penalty rate (100% to 300%)
Example:
If concealed income = ₹5,00,000
Tax on this = ₹1,50,000
Then penalty (at 100%) = ₹1,50,000
Maximum penalty (at 300%) = ₹4,50,000

Who Can Initiate Penalty Proceedings?
The following authorities can initiate proceedings:
Assessing Officer
Commissioner (Appeals)
Principal Commissioner/Director

✅ No Penalty Under Section 271(1)(c) When No Tax is Evaded
This is a critical concept. Courts have held:
If the returned and assessed income are the same, or
There’s no additional tax liability, or
A genuine and bonafide mistake was made, or
A claim was disallowed but was made transparently,
Then penalty under Section 271(1)(c) cannot be levied.

Landmark Judgments:
CIT v. Reliance Petroproducts Pvt. Ltd. [2010] – Merely making an incorrect claim does not amount to furnishing inaccurate particulars.
Price Waterhouse Coopers Pvt. Ltd. v. CIT [2012] – Bonafide and inadvertent error does not attract penalty.