2017 (6) TMI 242 - AT - Income Tax

Tribunal nullifies penalty under Income-tax Act, 1961 citing revised return acceptance.

The Tribunal dismissed the department's appeals, affirming the CIT(A)'s decision to delete the penalty under Section 271(1)(c) of the Income-tax Act, ... Penalty u/s 271(1)(c) - undisclosed foreign income - revised return filed u/s 153A after search - Held that:- the income returned by the assessee u/s 153A of the Act has been accepted by the AO and once the AO accepts the revised return filed u/s 153A of the Act, the original return u/s 139 of the Act abates and becomes non-est. Therefore, in view of case of Pr. CIT Vs Sh. Neeraj Jindal and Others [2017 (2) TMI 1002 - DELHI HIGH COURT ] the concealment has to be seen with reference to the return which has been filed by the assessee for the purpose of levying penalty u/s 271(1)(c) of the Act, what has to be seen is whether there is any concealment in the return filed by the assessee u/s 153A and not vis-à-vis the original return filed u/s 139 of the Act. In the present case, the same income has been accepted which was returned by the assessee, therefore, the penalty u/s 271(1)(c) of the Act was not leviable.- Decided in favor of assessee. Issues Involved:1. Deletion of penalty on account of undisclosed foreign income under Section 271(1)(c) of the Income-tax Act, 1961.2. Applicability of CBDT Circular No.21/2015 regarding low tax effect.3. Assessment of income under Section 153A versus original return under Section 139(1).Detailed Analysis:1. Deletion of Penalty on Account of Undisclosed Foreign Income:The primary issue in the appeals is the deletion of a penalty of Rs. 355 levied by the Assessing Officer (AO) under Section 271(1)(c) of the Income-tax Act, 1961. The assessee initially filed a return under Section 139(1) declaring an income of Rs. 4,83,040. Subsequently, in response to a notice under Section 153A, the assessee revised the income to Rs. 4,84,190, citing an additional foreign income of Rs. 1,150. The AO considered this amount as income with inaccurate particulars and levied a penalty of Rs. 355 based on several case laws.The assessee argued that the additional income was voluntarily disclosed and not due to any concealment or furnishing of inaccurate particulars. The CIT(A) accepted this explanation, noting the small amount involved and the assessee's non-resident status during the period of earning the foreign income. The penalty was thus deleted.2. Applicability of CBDT Circular No.21/2015:The department contended that the appeal was filed despite the low tax effect, as the case fell under exception (d) of Para 8 of CBDT Circular No.21/2015. However, the main focus remained on the deletion of the penalty rather than the applicability of the circular.3. Assessment of Income Under Section 153A Versus Original Return Under Section 139(1):The Tribunal emphasized that once the AO accepts the revised return filed under Section 153A, the original return under Section 139(1) abates and becomes non-est. This principle was supported by the Hon'ble Jurisdictional High Court's decision in the case of Pr. CIT Vs Sh. Neeraj Jindal and Others (2017) 393 ITR 1, which stated that for the purpose of levying penalty under Section 271(1)(c), the return to be considered is the one filed under Section 153A, not the original return under Section 139(1).The Tribunal concluded that since the income returned by the assessee under Section 153A was accepted by the AO, there was no concealment of income or furnishing of inaccurate particulars in the revised return. Consequently, the penalty under Section 271(1)(c) was not leviable.Conclusion:The Tribunal dismissed the department's appeals, affirming the CIT(A)'s decision to delete the penalty. The decision was based on the principle that the revised return under Section 153A, once accepted, nullifies the original return under Section 139(1), and no penalty can be levied if there is no concealment or inaccurate particulars in the revised return. The findings in ITA No. 6438/Del/2016 were applied mutatis mutandis to all other appeals, leading to their dismissal.