Section 270A penalty deleted where capital gains were disclosed in the return filed under section 148 and accepted in assessment.

Penalty for alleged under-reporting and misreporting under section 270A(9) was held unsustainable where the capital gains from sale of agricultural land, though omitted from the original return, were disclosed in the return filed in response to notice under section 148 and were accepted in assessment. The Tribunal compared the section 270A position with the return filed under section 148, not with the original return, and accepted the assessee's explanation that the transaction was bona fide believed to be non-taxable. As the material facts of the sale were disclosed when required, the penalty was deleted.

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Issues: Whether penalty under section 270A(9) of the Income-tax Act, 1961 was leviable for alleged under-reporting and misreporting of income where the capital gains on sale of agricultural land were omitted from the original return but were disclosed in response to notice under section 148 and accepted in assessment.

Analysis: The return filed in response to notice under section 148 reflected the capital gains and the assessment was completed accepting that return. On the facts, the Tribunal held that the comparison for applying section 270A had to be made with the return filed in response to section 148, and not in the manner suggested by the Revenue. The assessee's explanation that the land transaction was believed to be non-taxable was found to be bona fide, and the material facts relating to the sale were disclosed when called upon.

Conclusion: The penalty under section 270A(9) was not sustainable and was deleted, in favour of the assessee.

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