Voluntary disclosure and bona fide omission can defeat section 270A penalty where tax and interest are paid before assessment.

Penalty under section 270A was considered unsustainable where the assessee voluntarily disclosed additional income in the return filed under section 153C, paid tax and interest before assessment proceedings began, and explained the omission in the original return as inadvertent and bona fide. The Tribunal treated the surrounding facts as supporting genuine disclosure rather than deliberate concealment, and applied the principle that penalty cannot follow automatically merely because higher income is eventually offered. On that basis, the penalty was deleted.

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Issues: Whether penalty under section 270A could be sustained where the assessee had disclosed additional income in the return filed under section 153C, paid tax and interest before initiation of assessment proceedings, and the non-disclosure in the original return was claimed to be inadvertent and bona fide.

Analysis: The assessee had returned additional income in the search-related proceedings and had already discharged the tax liability along with interest before the assessment was initiated. The Tribunal noted that the disclosure was voluntary and that the surrounding facts supported the explanation that the omission in the original return was not deliberate. Relying on the principle that penalty is not to be imposed automatically merely because a higher income is ultimately offered, the Tribunal found the case fit for deletion of penalty.

Conclusion: The penalty under section 270A was deleted and the issue was decided in favour of the assessee.

Ratio Decidendi: Where additional income is voluntarily disclosed, tax and interest are paid before assessment, and the omission in the original return is shown to be bona fide, penalty cannot be sustained merely on the basis of the enhanced income offered in the search-related return.

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