Section 153A return governs concealment penalty, and voluntary disclosure without incriminating search material defeats section 271(1)(c).

In a search assessment, the return filed under section 153A was treated as the operative return for concealment and penalty purposes, so the higher income disclosed there, without incriminating material found during the search, did not justify penalty under section 271(1)(c). The prior section 139(1) return ceased to govern once the section 153A return was furnished and accepted. The Tribunal also condoned a 1028-day delay in filing the first appeal, accepting the delay as bona fide and non-deliberate and preferring substantial justice over technical lapse. Penalty was deleted and the assessee succeeded.

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Issues: (i) Whether income disclosed by the assessee in the return filed under section 153A, which is higher than the original return filed under section 139(1), is liable to penalty under section 271(1)(c) of the Income-tax Act, 1961; (ii) Whether the delay of 1028 days in filing the appeal before the Commissioner of Income Tax (Appeals) should be condoned so that the appeal on merits is admissible.

Issue (i): Whether the income disclosed in the return filed under section 153A (higher than the original return) attracts penalty under section 271(1)(c).

Analysis: Return filed under section 153A operates as the return for purposes of assessment after a search; a prior return under section 139(1) ceases to be operative once the section 153A return is furnished and accepted. Where additions or offered amounts arise from voluntary disclosures incorporated in the section 153A return and no incriminating material relating to those disclosures was found during the search, penalty under section 271(1)(c) cannot be sustained. Precedents establishing that penalty is not leviable when additions are based on voluntary offers and that unabated assessments require incriminating material recovered in the search to support additions were applied.

Conclusion: Decision in favour of the assessee; penalty under section 271(1)(c) deleted.

Issue (ii): Whether the delay of 1028 days in filing the appeal before the ld. CIT(A) ought to be condoned.

Analysis: The delay was attributed to non-deliberate failures by the assessee's accountant and resignation; the balance of substantial justice over technical lapse was applied following established principles that substantial justice should prevail and that bona fide, non-deliberate delay warrants condonation.

Conclusion: Delay condoned and appeal admitted; decision on merits rendered in favour of the assessee.

Final Conclusion: Both appeals are allowed and the penalty orders set aside; the Assessing Officer is directed to delete the penalties.

Ratio Decidendi: For search cases, the return filed and accepted under section 153A is the operative return for determining concealment and penalty; voluntary disclosures in a section 153A return supported only by no incriminating material from the search do not sustain penalty under section 271(1)(c), and bona fide non-deliberate delay should be condoned to secure substantial justice.

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