By TIOL News Service

CHENNAI, MAY 08, 2017: THE ISSUE BEFORE THE TRIBUNAL IS - Whether when the assessee found there was omission to disclose 'income otherwise taxable' under Income-tax Act and had accordingly filed revised return within the statutory period and offered the same for taxation, no penalty can be levied. NO is the answer.

Facts of the case:

The assessee is engaged in the business of gold covering and fancy items. There was a survey in the premises of the assessee u/s 133A of the Act. The assessee filed the revised return u/s 139(5) of the Act declaring total income. During the course of survey operation, it appeared the Revenue authorities found that the assessee-company did not account for a part of its business turnover. The Revenue authorities also found that the assessee generated unaccounted income by way of suppression of sales and also inflated purchases through accommodation entries. Therefore, the survey team found that the assessee had concealed its income. Accordingly, penalty was levied u/s 271(1)(c) of the Act. The fact remains that the assessee filed revised return voluntarily u/s 139(5) of the Act. The return filed by the assessee was processed and the same was accepted by making a disallowance of Rs. 5,43,708/- u/s 40A(2)(a) of the Act.

On appeal, the ITAT held that,

++ the assessee has filed revised return of income under Section 139(5) of the Act voluntarily disclosing all the income earned during the year under consideration. Other than the statutory disallowance of Rs. 5,43,708/- u/s 40A(2)(a), the entire income disclosed by the assessee was accepted without any further addition. When the assessee has filed revised return within the statutory period, u/s 139(5), this Tribunal is of the considered opinion that it cannot be said that the assessee has concealed any part of income or furnished any inaccurate particulars of income. The statutory provision allows the assessee to file revised return whenever there was omission to disclose the income which is otherwise taxable under the Income-tax Act. In this case, after the survey operation, the assessee found there was omission to disclose the income otherwise taxable under the Income-tax Act and accordingly filed revised return within the statutory period and offered the same for taxation. Therefore, this Tribunal is of the considered opinion that it is not a fit case for levy of penalty u/s 271(1)(c).

(See 2017-TIOL-608-ITAT-MAD )