No penalty can be levied u/s 271(1)(c) for concealment of income on addition made u/s 41(1) in respect of sundry creditors appearing in Balance-sheet:

AO levied penalty u/s 271(1)(c) on addition made u/s 41(1) in respect of sundry creditors outstanding at the end of the year. Hon’ble ITAT observed that such liability duly appeared in the Balance-sheet of the assessee and hence, it couldn’t be said that the conclusively liability ceased to exist. It was held that although the addition was not in dispute, it didn’t amount to concealment of income and hence, penalty was not justified on such addition. Accordingly, penalty was deleted.

[CHRAG HARMANBHAI PATEL (HUF) Vs. ITO – ITA Nos.298 & 1323/Ahd/2012]