RAWAT PRABHU PRAKASH SINGH CHUNDAWAT HUF,UDAIPUR vs. DCIT,CENTERAL CIRCLE-2, UDAIPUR

Facts

The assessee, an HUF operating a restaurant, underwent a survey under Section 133A where it was found that some expenses, particularly for perishable goods, lacked formal third-party invoices. To cover these unverifiable expenses and avoid litigation, the assessee voluntarily offered additional income by filing revised returns under Section 148. Despite the AO largely accepting these revised returns, penalties were levied under Section 271(1)(c) for furnishing inaccurate particulars.

Held

The tribunal held that the voluntary disclosure of additional income in revised returns, which were largely accepted by the AO without adverse inference or incriminating material, does not warrant a penalty under Section 271(1)(c). Citing judicial precedents, the tribunal emphasized that mere surrender of a claim without establishing concealment or inaccuracy, and without proper satisfaction recorded by the AO, cannot sustain a penalty. Therefore, the penalty levied for all assessment years was deemed unsustainable.

Key Issues

Whether penalty under Section 271(1)(c) is justified when the assessee voluntarily offers additional income in revised returns to cover unverifiable expenses, without a specific finding of concealment or inaccurate particulars by the AO. Whether the absence of recorded satisfaction by the AO regarding the limb of Section 271(1)(c) violated vitiates penalty proceedings.