Tribunal cancels penalty under Income Tax Act for assessee's voluntary disclosure.

The Tribunal set aside the CIT-A's decision and directed the AO to delete the penalty imposed under section 271(1)(c) of the Income Tax Act. The Tribunal found that the assessee's voluntary disclosure of correct income details before detection by tax authorities demonstrated a bona fide error, negating the presence of deliberate inaccuracies. Therefore, the penalty was deemed unwarranted, leading to a favorable outcome for the assessee in the appeal.

---

---

Issues:
Penalty under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.

Analysis:
The appeal was filed against the penalty order under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. The assessee contended that the penalty was unjustified as the correct income details were voluntarily disclosed before any detection by the Income Tax Department. The AO rejected the revised return, stating the original return was belated and inaccurate. The CIT-A confirmed the penalty.

The key contention was whether the assessee furnished inaccurate particulars of income. The AO held that the original return's particulars were inaccurate, leading to the penalty. The assessee argued that the revised return disclosed the correct income voluntarily, before any detection by the authorities. The Tribunal noted that the assessee rectified the mistake by revising the computation of income and paying due taxes, indicating a bona fide error.

Referring to a similar case precedent, the Tribunal emphasized the voluntary disclosure of income before detection as a crucial factor in determining penalty applicability. The term "inaccurate particulars of income" was discussed, emphasizing the need for conscious inaccuracies or errors in the details furnished. The Tribunal concluded that, in this case, the penalty under section 271(1)(c) was not warranted due to the voluntary disclosure and absence of deliberate inaccuracies.

The Tribunal set aside the CIT-A's decision and directed the AO to delete the penalty, allowing the assessee's appeal. The judgment was pronounced in Ahmedabad on 31/05/2022.

---