Tribunal Decision Upheld: Penalty Deleted for Good Faith Voluntary Disclosure

The Court upheld the Tribunal's decision to delete the penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961. The legal heir's voluntary disclosure of the undisclosed income related to a property, made in good faith to avoid litigation, was deemed bona fide by the Tribunal. The Court agreed that the disclosure was not to escape legal consequences but to prevent prolonged litigation with the Revenue. As the disclosure was considered genuine and made in good faith due to the lack of knowledge about the investment sources, the Court dismissed the appeal, finding no substantial question of law for determination.

---

---

Issues:
The judgment involves the issue of penalty u/s 271(1)(c) of the Income Tax Act, 1961 based on a voluntary disclosure made in response to notice u/s 148 to avoid litigation.

Summary:
The assessee filed a return of income for the assessment year 1998-99, declaring income from house property and salary earned as a partner in a firm. Subsequently, it was discovered that the assessee had acquired a property which was undeclared. The legal heir filed a return in response to a notice u/s 148, declaring the undisclosed income related to the property. Penalty proceedings were initiated u/s 271(1)(c) for concealing the investment in the property. The legal heirs stated that they were unaware of the source of investment and chose to surrender the amount voluntarily. The Assessing Officer imposed a penalty, which was upheld by the Commissioner of Income Tax (Appeals) but later deleted by the Tribunal, citing the voluntary disclosure made in good faith to avoid litigation.

The Tribunal found that the legal heir's disclosure was bona fide and voluntary, considering the circumstances where the assessee had passed away, and the legal heir had no knowledge of the investment sources. The Tribunal emphasized that the disclosure was not to avoid legal consequences but to prevent prolonged litigation with the Revenue. The Court upheld the Tribunal's decision, stating that the deletion of the penalty under Section 271(1)(c) was justified as the disclosure was made in good faith by the legal heir to avoid litigation. The Court found no error in the Tribunal's order and dismissed the appeal, stating that no substantial question of law arose for determination.

---