Concept:
The Water (Prevention and Control of Pollution) Act, 1974 was enacted to prevent and control water pollution, maintain or restore the wholesomeness of water, establish Pollution Control Boards, and provide penalties for violations.
Step 1: Examine each statement.
\[
\begin{aligned}
A. &\ \text{Correct. The Water Act was enacted in 1974.}
B. &\ \text{Correct. Its primary objective is the prevention, control, and abatement of water pollution.}
C. &\ \text{Incorrect. The Act not only monitors pollution but also provides legal action and penalties against polluters.}
D. &\ \text{Correct. Central and State Pollution Control Boards were established under the Act.}
\end{aligned}
\]
Step 2: Identify the incorrect statement.
The incorrect statement is
\[
\boxed{\text{Statement C}}
\]
Hence,
\[
\boxed{\text{(C)}}
\]