ITAT cancels penalty despite revised return; penalty solely based on voluntary disclosure

The ITAT canceled the penalty imposed under section 271(1)(c) despite the assessee revising the return and disclosing income before the notice under section 148 was issued. The ITAT found the penalty was solely based on the revised income offered by the assessee voluntarily, vacating the lower authorities' findings and partially allowing the appeal.

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Issues Involved:
1. Confirmation of penalty u/s 271(1)(c) despite revised return.
2. Allegation of furnishing inaccurate particulars and concealment of income.
3. Consideration of revised return and computation of income.
4. Acceptance of income based on revised return u/s 143(1)(a).
5. Computation of penalty amount.
6. Consideration of second revised computation of income.

Summary:

1. Confirmation of penalty u/s 271(1)(c) despite revised return:
The learned CIT(A) confirmed the penalty of Rs. 137,180/- u/s 271(1)(c) despite the assessee's claim of revising the return suo-moto on 29.03.1996 and paying taxes, showing bonafide intention.

2. Allegation of furnishing inaccurate particulars and concealment of income:
The CIT(A) found that the assessee furnished inaccurate particulars of income and concealed income without considering the documentary evidence filed by the assessee.

3. Consideration of revised return and computation of income:
The CIT(A) held that the revised return filed on 2.4.1996 was nonest as it was not within the prescribed time limit u/s 139(5). The subsequent revision of computation of income on 27.02.2001 was also considered nonest. The return filed on 10.4.2001 in response to notice u/s 148 was the only valid return.

4. Acceptance of income based on revised return u/s 143(1)(a):
The CIT(A) did not consider the intimation dated 17.03.1997 u/s 143(1)(a) issued by the AO, which accepted the income of Rs. 4,48,870/- based on the revised return filed on 29.03.1996.

5. Computation of penalty amount:
The CIT(A) upheld the penalty amount of Rs. 137,180/- based on the AO's computation, despite the assessee's claim of wrong computation and pending rectification applications u/s 154/155.

6. Consideration of second revised computation of income:
The CIT(A) did not consider the second revised computation of income filed on 27.02.2001 declaring income of Rs. 478,340/- before the issue of notice u/s 148 dated 10.04.2001.

Final Judgment:
The ITAT found that the assessee had disclosed all particulars of income before the issuance of notice u/s 148 and that the revised computation of income was accepted by the AO. The penalty was imposed merely on the basis of revised income offered by the assessee suo-moto. The ITAT vacated the findings of the lower authorities and canceled the penalty levied u/s 271(1)(c). The appeal was partly allowed.

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