ITAT Deletes Rs 28.53 Lakh Penalty for Voluntary Income Revision u/s 271(1)(c)

The assessee filed his income returns of Rs. 2,44,650 for the relevant assessment year. But after filing a notice under Section 143(2) for limited scrutiny, the assessee filed a revised return within the time prescribed under Section 139(4), declaring a total income of Rs. 1,27,57,490. The upward revision was due to the withdrawal of an incorrect claim for deduction under Section 54F made in the original return.

The Assessing Officer accepted the revised return in scrutiny assessment but initiated penalty proceedings under Section 271(1)(c) for alleged concealment in relation to the excess income declared. A penalty of Rs. 28,53,780 was imposed. The first appellate authority upheld the penalty, leading to the present appeal before the Tribunal.

Issue Raised: Whether a penalty under Section 271(1)(c) is leviable when a revised return is filed within the statutory period and accepted without any addition in assessment.

ITAT Held: The Tribunal held that the revised return had been filed voluntarily within the prescribed time under Section 139 (4), and the same was accepted by the Assessing Officer without making any additions. ITAT observed that a penalty under Section 271(1)(c) is ordinarily leviable only where there is an addition to the returned income or concealment is proved. Since no addition was made, the primary condition for levy of penalty was absent.

Relying on Suresh Chandra Mittal v. CIT the Tribunal held that when income is revised voluntarily and accepted as such, a penalty is not sustainable. The appellate order upholding the penalty was set aside, and the penalty deleted. The appeal was allowed in favour of the assessee.

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