No Levy of penalty merely because of non-disclosure of surrendered income in ITR: ITAT

The assessee filed a return of income for the impugned assessment year declaring a total income of Rs. 35,63,712. Subsequently survey proceedings were conducted by the Department during the course of which it was noticed by the officers conducting the survey that the assessee had paid on- money in cash of Rs. 59,19,500 for the purchase of land which was found to be his unaccounted income. Although later the assessee filed a revised return disclosing the said income it was filed beyond the prescribed time limit u/s. 139(5) of the Act, the AO made the addition of the said income as unaccounted income to the original return filed by the assessee, as Income from Other Sources and levied penalty u/s 271(1)(c) on the same amounting to Rs. 17,75,850 being 100% of the tax sought to be evaded.

The Ld. CIT(A) upheld the order of the A.O, and aggrieved the assessee filed an appeal before the tribunal. The Tribunal held that the surrender having been made after the filing of return of income for the impugned year, the assessee clearly forgot to disclose the same by way of a revised return and on commencement of assessment proceedings, at the first and earliest opportunity, realizing his mistake, he disclosed the same by way of filing a revised return. There is nothing to show that the disclosure was made on detection by the Revenue. It was held that the assessee had bonafidely failed to disclose the surrendered income and therefore it is clearly not a fit case for levy of penalty u/s 271(1)(c) of the Act and it was directed to be deleted by the Tribunal. Hence, the appeal filed by the Assessee was allowed.