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Facts
The assessee filed an original return and later a revised return declaring a higher income due to a wrong claim of deduction. The Assessing Officer accepted the revised income and initiated penalty proceedings under Section 271(1)(c). The CIT(A) confirmed the penalty.
Held
The Tribunal held that since the assessee filed a revised return voluntarily within the prescribed time limit, and the revised income was accepted by the Assessing Officer without any addition, no penalty is leviable under Section 271(1)(c) of the Act.
Key Issues
Whether penalty under Section 271(1)(c) is leviable when the assessee files a revised return with higher income which is accepted by the AO, and no addition is made.
Sections Cited
250, 271(1)(c), 143(2), 54F, 148, 139(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE
Before: DR.MANISH BORAD & MS.ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of assessee pertaining to A.Y. 2015-16 is directed against the order dated 28.01.2025 of National Faceless Appeal Centre (NFAC), Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Penalty Order dated 20.03.2018 passed u/s.271(1)(c) of the Act.
The only issue for our consideration is that ld.CIT(A) erred in confirming the action of the Assessing Officer levying penalty of Rs.28,53,780/-.
At the outset, Ld. Counsel for the assessee submitted that the impugned penalty deserves to be deleted as the returned income has been accepted by the ld. Assessing Officer. Further, he submitted that under similar set of facts, Ganesh Subhash Dhayarkar Hon’ble Courts and Tribunals have decided in favour of the assessee. Reliance placed on the judgment of Hon’ble High Court of Madhya Pradesh in the case of Suresh Chandra Mittal Vs. CIT reported in (2000) 241 ITR 121 which has been further affirmed by the Hon’ble Apex Court. Reliance also placed on the decision in the case of ITO Vs. Patil Automobiles reported in (2004) 91 ITD 1 (Pune TM).
On the other hand, ld. Departmental Representative supported the order of ld.CIT(A).
We have heard the rival contentions and perused the record placed before us. We observe that the assessee is an individual and declared income of Rs.2,44,650/- and the return for A.Y. 2015-16 furnished on 30.08.2015. After valid serving of notice u/s.143(2) of the Act for carrying Limited Scrutiny, the assessee filed revised return within the prescribed time limit on 31.03.2017 declaring income of Rs.1,27,57,490/-. The reason for increase in the income declared in the revised return was on account of wrong claim of deduction u/s.54F of the Act in the original return filed by the assessee. Ld. Assessing Officer carried out the scrutiny proceedings and accepted the returned income and also initiated penalty proceedings for the excess income disclosed in the revised return and thereby levied penalty of Rs.28,53,780/- in the penalty proceedings u/s.271(1)(c) of the Act.
Here, we would like to quote the judgment of Hon’ble Madhya Pradesh High Court in the case of Suresh Chandra Mittal (supra) wherein the Hon’ble Court on examining the facts of the case that in light of reasons to notice u/s.148 of Ganesh Subhash Dhayarkar the Act assessee filed revised return showing higher income and the assessment order was passed accepted the returned income, observed that the AO initiated penalty proceedings u/s. u/s.271(1)(c) of the Act. Penalty order has been cancelled by the Tribunal. Hon’ble Court thereafter concurring with the Tribunal’s view held that assessee had revised his return voluntarily and therefore no penalty is leviable. This judgment of Hon’ble Madhya Pradesh High Court has been subsequently affirmed by Hon’ble Apex Court reported in CIT Vs. Suresh Chandra Mittal reported in (2001) 251 ITR 9.
Examining the facts of the instant case in the light of the judgment of Hon’ble Madhya Pradesh High Court in the case of Suresh Chandra Mittal (supra) we find that in the instant case, the revised return of income has been filed within the prescribed time limit provided u/s.139(4) of the Act and the same has been accepted by ld. Assessing Officer and no addition has been sustained in the hands of assessee. Penalty u/s.271(1)(c) of the Act is leviable on the addition and since no addition is made in the hands of assessee, we hold that no penalty is leviable u/s.271(1)(c) of the Act in the instant case. Finding of ld.CIT(A) is set aside and grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on this 31st day of July, 2025.