Revised return after scrutiny notice can be validly accepted, with penalty cancellation sustained on the facts.

Where a notice under section 143(2)(b) is issued after a summary assessment under section 143(1), the earlier assessment stands opened for further proceedings, and a return filed thereafter may be treated as a revised return under section 139(5). On that basis, the later return was held validly treated as revised, and the cancellation of penalty under section 271(1)(c) was maintained in favour of the assessee. The discussion also notes that the penalty issue depended in part on factual appreciation.

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Issues: Whether the return filed after issuance of notice under section 143(2)(b) could be treated as a revised return under section 139(5), and whether the penalty under section 271(1)(c) was rightly cancelled on that basis.

Analysis: The assessment had initially been completed under section 143(1) of the Income-tax Act, 1961. Once notice under section 143(2)(b) was issued, the earlier assessment under section 143(1) stood in effect set aside for further proceedings. In that situation, the return filed thereafter could not be rejected as incapable of being treated as a revised return merely because the earlier summary assessment had been made. The question relating to levy of penalty under section 271(1)(c) also involved factual appreciation.

Conclusion: The return filed on January 5, 1980 was validly treated as a revised return, and the cancellation of penalty was upheld in favour of the assessee.

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