Penalty under section 271(1)(c) is not leviable on income disclosed in a section 153A return accepted without further addition.

Penalty under section 271(1)(c) is not leviable on income disclosed during search and included in a return filed in response to section 153A when that return is accepted without further addition. The controlling principle is that a section 153A return is to be treated as a return under section 139 for penalty purposes, so penalty can arise only on income assessed over and above the income returned under section 153A, if any. On that basis, the penalty was deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on the income disclosed during search and offered in the return filed in response to notice under section 153A.

Analysis: The assessee had disclosed additional income during search, included it in the return filed under section 153A, and the return was accepted without any further addition. The penalty had been sustained by following an earlier Special Bench view, but that view was subsequently reversed by the Gujarat High Court. The controlling principle applied was that the return filed under section 153A is to be treated as a return under section 139 for penalty purposes, and penalty can be levied only on income assessed over and above the income returned under section 153A, if any.

Conclusion: Penalty under section 271(1)(c) was not leviable and was deleted, in favour of the assessee.

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