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Facts
The assessee, a dealer in fish, filed returns on a cash basis. Following a search, the assessee filed revised returns disclosing accrued interest on investments. The Revenue contended that there was a difference in income disclosed and that penalties under Section 271(1)(c) and Section 270A were leviable. The assessee argued that the difference was only due to accrued interest and not concealment of income.
Held
The Tribunal noted that the assessee shifted from a cash basis to a mercantile system after the search. It held that the accrued interest offered in the revised return did not constitute undisclosed or suppressed income, nor did it amount to concealment or furnishing of inaccurate particulars.
Key Issues
Whether penalties levied under Section 271(1)(c) and Section 270A of the Income-tax Act are sustainable when the difference in returned income is due to offering accrued interest on a mercantile basis after a search, rather than concealment of income?
Sections Cited
271(1)(c), 270A, 139(1), 153A, 132
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Income Tax Appellate Tribunal, “CUTTACK” BENCH, CUTTACK
Before: SHRI GEORGE MATHAN, JM & SHRI RAJESH KUMAR, AM
O R D E R PER PENCH:
These are the appeals filed by the assessee against the orders of ld. CIT (A), Bhubaneswar-2, in appeal no. ITBA/APL/S/250/2024- 25/1070473434(1) for A.Y. 2013-14 to 2017-18.
Shri Lalatendu Sahu, represented on behalf the assessee and Shri Ashim Kumar Chakraborty, represented on behalf of the Revenue.
It was submitted by the ld. AR that to 115/CTK/2025 were against the penalties levied u/s 271(1)(c) of the Income-tax Act, 1961 (the Act) confirmed by the ld. CIT (A) and was against the penalty levied u/s 270A of the Act as confirmed by the ld. CIT (A). It was the submission that the assessee is a dealer in fish. It was submitted that a search was conducted u/s 132 of the Act at assessee’s premises. The assessee had originally filed his return of
In reply, the ld. CIT DR submitted that there is a difference between the original income filed u/s 139(1) of the Act and the returned filed in response to notice issued u/s 153A of the Act. It was the submission that in view of explanation 5A to Section 271(1)(c) of the Act, as there is a difference between the return filed in response to notice issued u/s 153A of the Act and the original return filed u/s 139(1) of the Act, the penalty to be levied u/s 271(1)(c) of the Act. In regard to provision of Section 270A of the Act, it was the submission that the assessee has concealed particulars of his income and furnished in accurate particulars of income.
We have considered rival the submissions. Admittedly, the assessee has been showing the interest income on the investments of cash basis. After search the assessee has started showing the interest income on accrual basis. It must be mentioned here that nowhere as the
In the result, the appeals of the assessee are allowed.
Order pronounced in the open court on 21.07.2025.