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Facts
A search action was conducted on the assessee, who subsequently filed a return under Section 153A of the Income Tax Act with a higher income than their original return. The AO initiated penalty proceedings under Section 271(1)(c) for concealment of income, which was confirmed by the CIT(A). For the second appeal, the CIT(A) dismissed the appeal due to a delay in filing, which the assessee explained as being due to their accountant's failure to inform them of the penalty order.
Held
The Tribunal held that once the return filed under Section 153A is accepted by the AO, there is no basis for imposing penalty under Section 271(1)(c) for concealment in relation to the original Section 139(1) return. For the second appeal, the Tribunal condoned the delay in filing the appeal, citing substantial justice.
Key Issues
Whether penalty under Section 271(1)(c) is leviable when income is disclosed in a Section 153A return filed post-search, which is higher than the original Section 139(1) return? Whether delay in filing appeal before CIT(A) should be condoned?
Sections Cited
271(1)(c), 153A, 139(1), 274, 132(1), 250
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Income Tax Appellate Tribunal, GAUHATI BENCH, GUWAHATI
Before: SHRI DUVVURU RL REDDY & SHRI RAJESH KUMAR
Assessee represented by Shri S.K. Tulsiyan, Advocate Department represented by Shri Santosh Kumar Karnani, Addl.CIT Date of hearing 09/03/2026 Date of pronouncement 13/03/2026 O R D E R PER: BENCH 1. The present appeals filed by the assessee arise from order dated 26/11/2025 and 24/10/2025, passed u/s 250 of the Income Tax Act, 1961 (In short, “the Act”) by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [In short, “the Ld. CIT(A)] for the A.Y. 2015-16 and 2016- 17 respectively. Since these appeals relating to same assessee and are involving common issues, therefore, these are being disposed of by this consolidated order for the sake of brevity and convenience. We would first take up the appeal for the A.Y. 2016-17.
2. The only issue raised by the assessee in the various grounds of appeal is against the order of the ld. CIT(A) in confirming the penalty of ₹ 1,01,25,099/- as imposed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961 (in short, the Act) on account of concealment of particulars of income.
& 419/GTY/2025 ABCI Infrastructure P Ltd. Vs ACIT/DCIT 3. The facts of the case, in brief, are that the assessee filed return of income under Section 139(1) of the Act on 17/10/2016 declaring income of ₹ 22,78,53,330/-. A search action under Section 132(1) of the Act was conducted on the assessee on 20/09/2019 followed by notice under Section 153A of the Act for the A.Y. 2014- 15 to 2019-20. The assessee filed return of income in compliance thereof on 13/02/2021 declaring total income of ₹ 25,71,09,850/-. The AO accepted the returned income as disclosed under Section 153A of the Act however in the assessment framed under Section 153A of the Act dated 29/09/2021, initiated penalty proceedings under Section 271(1)(c) of the Act vide notice dated 29/09/2021 for concealment of particulars of income. A show cause notice under Section 271(1)(c) read with Section 274 of the Act was issued on the same date. The assessee was asked to show cause as to why the penalty under Section 271(1)(c) of the Act should not be levied. The assessee replied notice by submitting that since the assessee as shown in the return filed under Section 153A has been accepted by the Assessing Officer, therefore, there is no question of levy of penalty under Section 271(1)(c) of the Act. The contention of the assessee was rejected by the Assessing Officer and a penalty of ₹ 1,01,25,009/- was imposed in the order passed under Section 271(1)(c) of the Act dated 28/03/2022 on the amount of ₹ 2,92,56,525/- which was stated to be the income in respect of which the assessee furnished inaccurate particulars of income.
The assessee challenged the order of the Assessing Officer imposing penalty before the ld. CIT(A). The ld. CIT(A) confirmed the order of the Assessing Officer & 419/GTY/2025 ABCI Infrastructure P Ltd. Vs ACIT/DCIT by observing that had there been no search on the assessee, the assessee would not have disclosed the income in the return filed under Section 153A of the Act. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before this Tribunal.
We have heard the rival contentions and perused the material on record. It is undisputed fact as culling out of the records that a search action under Section 132(1) of the Act was conducted on the assessee on 20/09/2019 and thereafter the assessee filed return of income under Section 153A of the Act in compliance to notice issued under Section 153A. The assessee disclosed income of ₹ 25,71,09,850/- which is more by ₹ 2,92,56,525/-, as the assessee has voluntarily offered the income as per the details below: Sale of Scrap: ₹ 12,81,525/- Overbooking of expenses: ₹ 55,00,000/- Rebate and discount from various customers: ₹ 2,24,74,000/- Total ₹ 2,92,56,525/- Initially, the assessee made disclosure before the DDIT (Inv.), Unit-1(2), Guwahati on 11/12/2019 and thereafter revised the same and also incorporated the same in the return filed under Section 153A of the Act. The Assessing Officer initiated the proceedings under Section 271(1)(c) of the Act on the ground that the assessee’s income as declared under Section 153A of the Act is higher than the income as disclosed in the return of income filed under Section 139(1) of the Act.
Now the issue before us is whether the income disclosed by the assessee in the return filed under Section 153A of the Act which is apparently higher than the return of income as filed under Section 139(1) of the Act is liable to penalty & 419/GTY/2025 ABCI Infrastructure P Ltd. Vs ACIT/DCIT under Section 271(1)(c) of the Act. We have perused the provisions of Section 139(1) as well as 153A of the Act and note that once the assessee has furnished the return of income under Section 153A, then the return filed earlier under Section 139(1) of the Act become non-est as per provisions of Section 153A of the Act. In other words, if the return filed under Section 139(1) of the Act is considered in a search cases, then the provisions of Section 153A requiring the assessee to file return of income under Section 153A of the Act would become otiose and redundant which is not the spirit of the statute. In our opinion, once the income declared by the assessee in the return filed under Section 153A of the Act is accepted then the Assessing Officer has no locus-standi to impose penalty under Section 271(1)(c) of the Act. The case of the assessee is squarely covered by the decision of the Hon'ble Delhi High Court in the case of PCIT Vs Neeraj Jindal reported in (2017) 393 ITR 0001 (Delhi) wherein the Hon'ble High Court has held as under: “Thus, it is clear that when the Assessing Officer has accepted the revised return filed by the assessee under section 1534. no occasion arises to refer to the previous return filed under section 139. For all purposes, including for the purpose of levying penalty under section 271(1)(c), the return that has to be looked at is the one filed under section 1534. Section 1534 is in the nature of a second chance given to the assessee, which incidentally gives him an opportunity to make good omission, if any, in the original return. Once the Assessing Officer accepts the revised return filed under section 153A, the original return under section 139 abates and becomes non est. The 'concealment has to be seen with reference to the return that is filed by the assessee. Thus, for the purpose of levying penalty under section 271(1)(c), what has to be seen is whether there is any concealment in the return filed by the assessee under section 153.A. and not vis-à-vis the original return under section 139. [Para 21]”
Similarly, in the case of Sudarshan Silk and Sarees Vs CIT (2008) 300 ITR 205 (SC) wherein the Hon'ble Supreme Court has confirmed the finding of the ITAT that if ABCI Infrastructure P Ltd. Vs ACIT/DCIT the appellate offers any amount for taxation for the purpose of purchasing peace and assessment has been made based upon the aforesaid offerings, even if no assurance in writing is given by the searching party, it may be clearly inferred that such an inducement must have been given by the searching party. When only partial evidence or no evidence in support of concealment was detected during the search, why would a person go to offer a higher amount unless he was promised some reciprocal benefits like not being visited by penalty. Thus, it was held where additions have been made based on assessee’s own offerings, penalty provision shall not lie.
Even otherwise, the penalty levied by the Assessing Officer is not maintainable as the impugned assessment is unabated on the date of search and there was no incriminating material found by the search team during the course of search qua the amounts offered by the assessee voluntarily and gratuitously. The assessee was not bound to offer these income in the return filed under Section 153A of the Act, however, in order to buy peace of mind, the said disclosure was made. It is trite law as settled by the Hon'ble Supreme Court in the case of PCIT, Central-3 Vs Abhisar Buildwell (P) Ltd. (2023) 149 taxmann.com 399 (SC)/(2023) 454 ITR 212 (SC) wherein it has been held that in the case of unabated assessment, the Assessing Officer has no jurisdiction to make addition unless the search team has found incriminating material qua the proposed addition by the Assessing Officer. Therefore, even on this count, the penalty levied by the Assessing Officer is not sustainable in the eyes of law. Consequently, we are inclined to set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the penalty. The appeal of the assessee is allowed.
A.Y. 2015-16. The only issue raised by the assessee in the various grounds of appeal is against the order of the ld. CIT(A) in confirming the penalty of ₹ 7,18,933/- as imposed by the & 419/GTY/2025 ABCI Infrastructure P Ltd. Vs ACIT/DCIT Assessing Officer under Section 271(1)(c) of the Act on account of concealment of particulars of income by not condoning the delay in filing appeal before the ld. CIT(A).
9. After hearing the rival contentions and perusing the material on record, we find that the facts of this case qua the addition made and imposition of penalty are similar with variation in the amount only. We note that the ld. CIT(A) dismissed the appeal of the assessee by not condoning the delay of 1028 days. We note that the delay in filing appeal before the ld. CIT(A) was stated to be for the reasons that the accountant of the assessee, who was entrusted with the job to comply with the notices/orders received from the Income Tax department and bring the same to the appellant did not inform the assessee. Further the accountant of the assessee resigned from the office on 01/03/2024. The appellant became aware of the penalty order having been passed after receipt of recovery of demand letter dated 17/02/2025 stating therein that outstanding demand of ₹ 7,18,933/- for the A.Y. 2015-16. Thereafter, steps were taken to file appeal and accordingly, the appeal was filed with the delay of 1028 days. After taking into the reasons cited by the ld. counsel for the assessee, we are of the view that the reasons to be genuine and bona fide. The case of the assessee is squarely covered by the decision of the Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs Mst. Katiji & Others, 1987 AIR 1353 wherein the Hon'ble Supreme Court has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Respectfully following & 419/GTY/2025 ABCI Infrastructure P Ltd. Vs ACIT/DCIT the ratio laid down in the above decision, we are inclined to condone the delay and we do so and admit the appeal for hearing and adjudication.
10. Since the issue raised in this appeal is substantially similar as decided by us in for the A.Y. 2016-17 and therefore, our decision in would mutatis mutandis apply to this appeal as well. Consequently, we set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the penalty. The appeal is allowed.
In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 13/03/2026.