Penalty u/s 271 will not sustain on Unintentional failure in Disclosure of Income: ITAT [Read Order]

The Income Tax Appellate Tribunal, Ahmedabad bench has held that penalty u/s 271 will not sustain on unintentional failure in disclosure of income.

The appellant was represented by Shri P.F. Jain and the respondent was represented by Shri Mukesh Kumar Sharma.

Ms Annapurna Gupta, Accountant Member and Shri Mahavir Prasad, Judicial Member observed that the assessee at the first and earliest opportunity, realizing his mistake of non-surrendering of income, disclosed the same by way of filing a revised return.

The appeal was filed by the assessee against the order passed by the Commissioner of Income Tax u/s. 250(6) of the Income Tax Act, 1961 pertaining to Assessment Year (A.Y) 2010-11 for confirming levy of penalty u/s. 271(1)(c) of the Act. 

The Income Tax authorities charged penalty u/s 271(1)(c) of the Act, for concealment /furnishing of inaccurate particulars of income, has been levied on the addition made to the income of the assessee of Rs. 59,19,500/-, being on- money paid in cash for purchase of land which was surrendered by the assessee during survey proceedings. 

On the survey, it was noticed by the officers that the assessee had paid on- money in cash of Rs. 59,19,500/- for the purchase of land and the same was surrendered as his unaccounted income in the statement recording during survey. Thereafter the assessee filed a revised return disclosing the said income in his return of income which was beyond the time limit prescribed u/s. 139(5) of the Act. The AO rejected the revised return filed by the assessee and made addition of the said admitted unaccounted income as Income from Other Sources and initiated proceedings for the levy of penalty on the same u/s. 271(1)(c) of the Act.

The assessee contended that the failure to disclose the income in his original return was on account of a bonafide mistake and that therefore suo moto and voluntarily he had filed the revised return including the unaccounted income in the same and had also paid taxes thereon. CIT(A) upheld the order of the A.O. stating that the disclosure by the assessee in the revised return only after detection by the department and therefore the assessee could not be saved from the levy of penalty.

The Tribunal observed that the failure to disclose the income was by mistake and not deliberate as the assessee on his own suo moto disclosed the same amount by way of revised return before the revenue confront him. The Tribunal held that the assessee had bonafidely failed to disclose the surrendered income and the penalty levied of Rs.17,75,820/- was directed to be deleted. The appeal filed by the assessee stands allowed.

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