Penalty Under Section 271(1)(c) Cannot Apply to Income Voluntarily Disclosed During Survey and Included in Returns

The ITAT ruled that penalty under section 271(1)(c) cannot be imposed on additional income voluntarily disclosed by the assessee during survey proceedings and subsequently included in tax returns. The AO relied solely on assumptions without corroborative evidence that the assessee had concealed income. The Tribunal emphasized that penalty provisions must be construed strictly and cannot be based on surmises or conjectures. Since the assessee made complete disclosure in the return of income and surrendered the amount for taxation purposes, there was no actual concealment or non-disclosure warranting penalty. Explanations 5 and 5A to section 271(1) were deemed exceptions to the general rule. Appeal decided in favor of the assessee. .....

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