2021 (3) TMI 457 - AT - Income Tax

Penalty u/s 271(1)(C) - reopening of assessment u/s 147 - CIT(A) affirmed the order of the AO by holding that assessee has furnished inaccurate particulars of income by not disclosing the income from sale of shop in the original return of income and assessee has only disclosed the income in the revised return of income after the survey was conducted on the purchaser M/s. Gold Finch Jewelers Ltd. - HELD THAT - No notice was issued u/s.148 prior to the filing of the revised return and thus, we note that assessee has voluntarily suo-motto filed the revised return of income and offered to tax whatever was left from being disclosed in the original return of income. Revised return was not filed in response to notice issued u/s.148 and therefore, the assessee cannot be held liable for furnishing in accurate particulars of income or for concealment of income as the income stands offered to tax in the revised return of income - We are not in agreement with the conclusion drawn by the ld. CIT(A) on this issue as assessee cannot be penalized where assessee suo-motto came forward and paid tax on the income which was omitted to disclose in the original return of income and was offered to tax in the revised return of income and especially the fact that notice u/s.148 by issue after filing of revised return. In view of these facts we set aside the order of the ld. CIT(A) and direct the ld. AO to delete the penalty. - Decided in favour of assessee.

Summary

Issues:
Challenge against penalty imposed under section 271(1)(C) of the Act for non-disclosure of income from the sale of a shop in the original return of income.

Analysis:
The appellant contested the penalty of ?2,36,914 imposed by the AO under section 271(1)(C) of the Act for not disclosing income from the sale of a shop in the original return. The appellant revised the return, declaring the income subsequently. The AO initiated penalty proceedings, citing failure to fully disclose income. The CIT(A) upheld the penalty, stating inaccurate particulars were furnished. However, the ITAT found that the appellant voluntarily revised the return without prior notice under section 148. The ITAT noted that the taxes were paid along with interest, and the revised return was not in response to a notice. The ITAT concluded that the appellant cannot be penalized for non-disclosure since the income was offered in the revised return without a prior notice. Therefore, the ITAT set aside the CIT(A) order and directed the AO to delete the penalty.

In summary, the ITAT allowed the appeal, emphasizing that the appellant cannot be penalized for non-disclosure when the income was voluntarily declared in the revised return without prior notice under section 148. The ITAT highlighted that the taxes were paid along with interest, and the revised return was not filed in response to a notice. Consequently, the ITAT directed the AO to delete the penalty imposed under section 271(1)(C) of the Act.