KURUZU RUSSELIAN,CHENNAI vs. ITO, NCC-22(1), CHENNAI

For that, the Commissioner of Income Tax (Appeals) failed to appreciate that the Assessing Officer's order is without juri iction.

For that the Commissioner of Income Tax (Appeals) failed to appreciate that the appellant had reasonable cause for the delay in filing the appeal before him.

For that the Commissioner of Income Tax (Appeals) failed to appreciate that the appellant could have derived no benefit by filing the appeal belatedly and that the same could not have been the intent of the appellant.

The penalty levied under Section 271(1)(c) is bad in law because the Assessing Officer failed to establish that the appellant had concealed income or furnished inaccurate particulars, which are mandatory preconditions for invoking this section.

For that, the Commissioner of Income Tax (Appeals) failed to provide the appellant with sufficient and fair opportunity to explain the delay in filing the appeal and to rebut the allegations of concealment, thereby violating the principles of natural justice.

For that, the Commissioner of Income Tax (Appeals) erred in dismissing the appeal on account of a delay of 241 days without appreciating the genuine and reasonable cause for such delay, which was duly explained in the condonation petition.

For that, the Commissioner of Income Tax (Appeals) erred in upholding the penalty under Section 271(1)(c) without properly considering the facts of the case.

For that the Commissioner of Income Tax (Appeals) failed to appreciate that the provisions of Section 271(1)(c) of the Income Tax Act are not invocable in the facts and circumstances of the case.

For that, the Commissioner of Income Tax (Appeals) has failed to appreciate that penalty proceedings are separate and independent from assessment proceedings.

For that without prejudice to the above, the Commissioner of Income Tax (Appeals) failed to appreciate that all the incomes were duly accounted, tax audit was completed and the tax also paid well before the issue of notice under section 147 of the Income Tax Act, 1961.”

The brief facts of the case, as emanating from the records, are that the assessee is an individual who had not filed the return of income for the impugned assessment year within the prescribed time. Based on information available on the ITBA and Insight portal, the AO observed that the assessee had allegedly purchased an immovable property for a consideration of Rs.10,00,00,000/-. Consequently, the case of the assessee was reopened and notice u/s.148 of the Act was issued on 29.03.2022. 4. In response to the said notice, the assessee filed his return of income on 02.05.2022 declaring a total income of Rs.2,82,69,370/-. During the course of the reassessment proceedings, the assessee clarified that he had not purchased any immovable property for Rs.10,00,00,000/- as reflected in the information available with the Department. Instead, the assessee submitted that he had purchased and sold certain other properties during the relevant period and furnished the necessary documentary evidence before the AO in support of the said transactions.

In the return of income filed in response to the notice issued u/s.148 of the Act, the assessee had offered Long Term Capital Gains amounting to Rs.2,41,45,916/- after claiming indexed cost of acquisition of Rs.8,54,084/-. The assessee also furnished the relevant documentary evidence in support of the computation of capital gains during the course of the assessment proceedings. Upon considering the submissions and evidence furnished by the assessee, the AO completed the reassessment u/s.147 of the Act vide order dated 15.03.2023 accepting the returned income. Simultaneously, the AO initiated penalty proceedings u/s.271(1)(c) of the Act on the same date for alleged concealment of income.

The AO observed that the assessee had not filed the return of income voluntarily within the prescribed time and had filed the return only after receipt of notice u/s.148 of the Act. On this premise, the AO concluded that the assessee had deliberately concealed the particulars of income. Accordingly, the :-4-: ITA. No:2830/Chny/2025

Aggrieved by the penalty order passed by the AO, the assessee preferred an appeal before the Ld.CIT(A). It is noted that there was a delay in filing the said appeal before the Ld.CIT(A). The Ld. CIT(A), vide the impugned appellate order dated 19.09.2025, dismissed the appeal of the assessee both on the ground of limitation as well as on merits.

Being aggrieved by the order of the Ld.CIT(A) in sustaining the levy of penalty u/s.271(1)(c) of the Act, the assessee is now in appeal before us.

The Ld.AR appearing on behalf of the assessee submitted that the return of income filed in response to the notice issued u/s.148 of the Act was accepted by the AO without making any additions or variations. Therefore, according to the Ld.AR, there was neither concealment of income nor furnishing of inaccurate particulars of income in the return filed by the assessee. The Ld. AR further submitted that the applicable taxes on the returned income had already been paid by the assessee much prior to the issuance of notice u/s.148 of the Act, thereby demonstrating that there was no deliberate intention on the part of the assessee to evade payment of taxes. Accordingly, the Ld.AR prayed that the penalty levied by the AO be deleted.

Per contra, the Ld.DR relied upon the orders of the lower authorities and supported the levy of penalty under section 271(1)(c) of the Act.

We have heard the rival submissions and carefully perused the material available on record. The undisputed factual position emerging from the records is that the reassessment proceedings initiated by the AO u/s.147 of the Act culminated in the assessment order dated 15.03.2023, wherein the AO accepted the return of income filed by the assessee in response to the notice issued u/s.148 of the Act. It is an admitted fact that the AO has not made any addition or disallowance while completing the reassessment. Thus, the income

The penalty u/s.271(1)(c) of the Act can be levied only when there is concealment of particulars of income or furnishing of inaccurate particulars of income. In the present case, when the AO himself has accepted the returned income without making any modification, the question of concealment of income or furnishing of inaccurate particulars does not arise.

The sole basis adopted by the AO for initiating penalty proceedings is that the assessee had not filed the return of income within the due date and had filed the return only after issuance of notice u/s.148 of the Act. In our considered view, such reasoning by itself cannot form the basis for levy of penalty u/s.271(1)(c) of the Act when the income returned by the assessee has been accepted without any variation.

Further, it is also evident from the records that the applicable taxes of Rs.95,07,620/- (Paper book page No.65 – Computation of Income and Page No.54 to 58 – Form 26AS) on the income declared by the assessee had already been paid from 26.12.2016 to 25.10.2018 which is prior to the issuance of notice u/s.148 of the Act dated 29.03.2022. This fact lends support to the contention of the assessee that there was no intention to conceal income or evade payment of taxes.

It is a settled proposition of law that penalty proceedings are distinct from assessment proceedings, and the burden lies upon the Revenue to establish that the assessee has either concealed the particulars of income or furnished inaccurate particulars thereof. In the absence of any addition or adverse finding in the assessment order, the levy of penalty u/s.271(1)(c) of the Act cannot be sustained.

In the present case, the AO has merely proceeded on the premise that the return was filed after issuance of notice u/s.148 of the Act. However, the AO

Therefore, considering the totality of facts and circumstances of the case, we are of the view that the conditions necessary for invoking the provisions of section 271(1)(c) of the Act are not satisfied. Accordingly, we hold that the penalty of Rs.48,29,183/- levied by the AO and sustained by the Ld.CIT(A) is not sustainable in law and the same is hereby directed to be deleted.

In the result, the appeal filed by the assessee is allowed and the penalty levied u/s.271(1)(c) of the Act stands deleted.

In the result, the appeal of the assessee stands allowed.

अपीलाथ'/Appellant 2. ()यथ'/Respondent 3.आयकर आयु3त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 1वभागीय (तन ध/DR 5. गाड% फाईल/GF