ITAT Ahmedabad deletes section 271(1)(c) penalty where reassessment accepted returned income without addition

The Ahmedabad SMC Bench of the Income Tax Appellate Tribunal has deleted a penalty of Rs. 55,870 imposed under section 271(1)(c) for assessment year 2016-17.

The assessee had not filed an original return under section 139. A return was later filed only in response to notice under section 148, declaring taxable income of Rs. 6,45,230. That return was accepted in reassessment without any addition or disallowance. Revenue nevertheless levied penalty on the footing that the income had been returned only after the assessee was “cornered” by reopening proceedings.

The Tribunal held that, on these facts, the essential ingredients for penalty under section 271(1)(c) were not made out. Where the reassessed income is accepted at the same figure as returned and no addition is made, penalty cannot rest merely on the circumstance that the return was filed in response to section 148 notice. The assessee’s explanation that non-filing of the original return arose from circumstances beyond her control and a lapse by the earlier tax consultant also supported the absence of a concealment case.