Penalty under Section 271(1)(c) deleted for voluntary surrender of income during assessment proceedings

ITAT Jaipur-AT deleted penalty under section 271(1)(c) where assessee voluntarily surrendered income while filing return in response to notice under section 153A. The assessee had filed revised computation adding short-term capital gains and minor rental/interest income during assessment proceedings. The tribunal held that voluntary surrender and correction of bona fide mistakes cannot constitute concealment or furnishing inaccurate particulars with deliberate intent. Following precedents from Gujarat HC in Kirit Dahyabhai Patel and Gujarat State Electricity Corporation cases, the tribunal ruled no penalty applies when assessee corrects genuine errors without willful concealment attempt. Appeal decided in favor of assessee.

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Issues Involved:
1. Delay in filing the appeal.
2. Levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961.

Summary:

1. Delay in Filing the Appeal:
The appeals were delayed, and the assessee contended that the appeal was filed online on 25.04.2023, within the time limit, but the hard copy was submitted on 23.05.2023 due to the appellant being out of town. The tribunal condoned the delay and proceeded to hear the matter on merits.

2. Levy of Penalty under Section 271(1)(c):
The primary issue in all twelve appeals was the levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961. The tribunal consolidated the appeals and took ITA No. 336/JP/2023 as the lead case for discussion, as the facts and circumstances were identical across all cases.

The assessee argued that the penalty was wrongly upheld by the CIT(A), as the income declared in the return filed under Section 153A was the assessed income, and no concealment or furnishing of inaccurate particulars occurred. The assessee had filed a revised computation of income during the assessment proceedings, which was accepted by the AO without finding any fault.

The CIT(A) had partly upheld the penalty, stating that the assessee had concealed particulars of income by not including short-term capital gains in the original return. However, the tribunal found that the assessee had voluntarily surrendered the additional amount for taxation during the assessment proceedings, which was accepted without any issues.

The tribunal referred to the Gujarat High Court's decision in Kirit Dahyabhai Patel Vs. ACIT, which held that the return filed in response to notice under Section 153A is to be considered as a return filed under Section 139, and penalty is to be levied on the income assessed over and above the income returned under Section 153A. The tribunal also noted that the assessee had corrected the mistake voluntarily, indicating no willful attempt to conceal income.

Based on these findings, the tribunal set aside the CIT(A)'s decision and directed the AO to delete the penalty imposed. The decision in ITA No. 336/JP/2023 was applied mutatis mutandis to ITA Nos. 337 to 347/JP/2023, and all appeals were allowed.

Order Pronounced:
The order was pronounced in the open court on 24/08/2023.

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