Voluntary Surrender of Income prevents penalty where a revised return is filed and accepted before detection proceedings conclude.

Voluntary surrender of income by filing a revised return which is accepted before completion of detection proceedings negates liability for penalty under section 271(1)(c); the article explains that where the assessing officer accepts the surrendered income and assesses it, penalty is not exigible. It further clarifies that concealment and furnishing inaccurate particulars are distinct limbs and that initiation of penalty requires a valid notice addressing the specific limb relied upon; absence of a proper notice supporting levy undermines the penalty. Operative effect: accepted voluntary disclosures made during/after detection ordinarily preclude imposition of penalty.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 can be imposed where an assessee, after a survey under section 133A, voluntarily disclosed additional income, filed a revised return within time and the assessing officer accepted the surrendered income.

Analysis: The Court examined whether a voluntary disclosure of additional income made during/after detection proceedings and incorporated in a revised return accepted by the assessing officer can sustain penalty under section 271(1)(c). Authorities were considered holding that where the process of detection was not complete and the assessee filed a revised return showing higher income to "buy peace of mind" and the additional income was accepted by the revenue and assessed under section 143(3), penalty under section 271(1)(c) is not exigible. The Court also examined whether penalty was validly initiated on both limbs (concealment and furnishing inaccurate particulars) and whether mandatory notice was issued before levy; absence of a proper notice and the distinctness of the two limbs were taken into account.

Conclusion: Penalty under section 271(1)(c) cannot be imposed on the facts where the assessee voluntarily disclosed additional income, filed a revised return which was accepted by the assessing officer, and no proper notice supporting levy on the distinct limbs was placed on record; appeal allowed in favour of the assessee.

Ratio Decidendi: Where an assessee voluntarily surrenders income by filing a revised return which is accepted by the assessing officer before completion of the detection process, penalty under section 271(1)(c) of the Income-tax Act, 1961 is not exigible; concealment and furnishing inaccurate particulars are distinct limbs and a valid notice is required before imposition of penalty.

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