SHIVALAKSHMI AERUKALA,HYDERABAD vs. ITO, WARD-17(1), HYDERABAD

आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘SMC‘ Bench, Hyderabad �ी रिवश सूद,�ाियक सद� एवं �ी मधुसूदन साविड़या लेखा सद� सम� | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No. 2477/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2016-17) Smt. Shivalakshmi Vs. Income Tax Officer Aerukala Ward 17(1) HYDERABAD Hyderabad PAN: AOOPA5859D (Appellant) (Respondent) िनधा�रती �ारा/Assessee by: Advocate Ankith राज� व �ारा/Revenue by: Shri Vamshi Krishna, Sr. AR सुनवाई की तारीख/Date of hearing: 10/06/2026 घोषणा की तारीख/Pronouncement: 15/07/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.:

This appeal is filed by Smt. Shivalakshmi Aerukala (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) (“Ld. CIT(A)”) dated 30.10.2025 for the A.Y. 2016-17. 2. The assessee has raised the following grounds of appeal:

under section 148 of the Act, the assessee filed a return of income declaring total income of ₹44,60,000/-. After considering the submissions of the assessee, the Ld. AO accepted the returned income and completed the reassessment under section 147 r.w.s. 144B of the Act, dated 27.03.2024 without making any addition or disallowance. Subsequently, the Ld. AO initiated penalty proceedings under section 271(1)(c) of the Act and finally levied penalty of ₹8,67,260/- vide order dated 23.09.2024. 4. Aggrieved by the penalty order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, upheld the action of the Ld. AO and dismissed the appeal of the assessee. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before the Tribunal. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the solitary issue arising out of the grounds of appeal of the assessee is regarding the levy of penalty of ₹8,67,260/- under section 271(1)(c) of the Act. The Ld. AR submitted that for invoking the provisions of section 271(1)(c) of the Act, there must be concealment of particulars of income or furnishing of inaccurate particulars of income resulting in addition to the income returned by the assessee. It was submitted that in the present case, the income returned by the assessee in response to notice under section 148 of the Act has been accepted by the Ld. AO without any modification. Thus, there is no difference between the returned income and the assessed income. The Ld. AR further submitted that when the returned income and assessed income are identical, there is no tax sought to be

evaded. Accordingly, it was prayed that the penalty levied by the Ld. AO and sustained by the Ld. CIT(A) be deleted. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) strongly relied upon the orders of the lower authorities. The Ld. DR submitted that it was only on account of detection by the Revenue that the assessee came forward to disclose the income. According to the Ld. DR, had the notice under section 148 of the Act not been issued, the assessee would not have disclosed the income arising from the sale of the immovable property. Therefore, it was contended that the assessee had concealed particulars of income and the case squarely falls within the ambit of section 271(1)(c) of the Act. The Ld. DR further submitted that the Ld. AO as well as the Ld. CIT(A) have rightly levied and confirmed the penalty and no interference is called for. Accordingly, he prayed for dismissal of the appeal filed by the assessee. 7. We have heard the rival submissions and perused the material available on record. The solitary issue for our consideration is whether the penalty levied under section 271(1)(c) of the Act can survive in a case where the income returned by the assessee has been accepted in entirety by the Ld. AO and no addition has been made in the assessment. There is no dispute regarding the fact that the assessee filed a return of income declaring total income of ₹44,60,000/- in response to notice issued under section 148 of the Act. It is also an undisputed fact that the Ld. AO accepted the returned income and completed the reassessment without making any addition or disallowance. Thus, the returned income and the assessed income are exactly the same. We find that an identical

issue has been considered by the Mumbai Bench of the Tribunal in the case of Armoury International Vs. ACIT in ITA Nos. 3299, 3300 & 3301/Mum/2017 for assessment years 2009-10 to 2011-12 vide order dated 01.01.2019. The Coordinate Bench, after considering the scheme of section 271(1)(c) of the Act, at para nos. 6 & 7 has held as under:

machinery provisions relating to levy of penalty fail because the penalty under section 271(1)(c) of the Act is linked with the tax sought to be evaded, which is computed with reference to the difference between the assessed income and the returned income. In the present case also, there is no variation between the returned income and the assessed income. No concealment of income or furnishing of inaccurate particulars has been brought on record by the Ld. AO during the reassessment proceedings. The reassessment order itself accepts the income returned by the assessee. Consequently, there is no amount of tax sought to be evaded which can be attributed to any addition or disallowance made by the Ld. AO. Once the returned income and assessed income are identical, the very basis for levy of penalty under section 271(1)(c) of the Act ceases to exist. In such circumstances, the provisions relating to computation and levy of penalty become unworkable and the penalty cannot be sustained merely because the return was filed in response to notice under section 148 of the Act. Respectfully following the decision of the Coordinate Bench in the case of Armoury International Vs. ACIT (supra), we hold that when the returned income and assessed income are the same, the provisions of section 271(1)(c) of the Act are not attracted and the penalty levied thereunder is liable to be deleted. Accordingly, we set aside the order of the Ld. CIT(A) and direct the Ld. AO to delete the penalty of ₹8,67,260/- levied under section 271(1)(c) of the Act.

Order pronounced in the Open Court on 15th July, 2026. Sd/- Sd/- (RAVISH SOOD) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, dated 15th July, 2026. Vinodan/sps

Copy to: S.No Addresses 1 Smt. SHIVALAKSHMI AERUKALA, B109, Western Plaza Opp to OU Colony, Golconda S.O Himayathsagar HYDERABAD 500008 2 Income Tax Officer Ward-17(1), Signature Towers, Kondapur Hyderabad 3 Pr. CIT , Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File

By Order TUMMALACHARLA Digitally signed by TUMMALACHARLA LAKSHMI NARAYANA DN: cn=TUMMALACHARLA LAKSHMI LAKSHMI NARAYANA, c=IN, o=INCOME TAX APPELLATE TRIBUNAL, ou=INCOME TAX NARAYANA APPELLATE TRIBUNAL, CHENNAI BENCH Date: 2026.07.15 12:16:20 +05'30'