Virtual Galaxy Infotech Ltd. Vs ACIT (ITAT Nagpur)
Nagpur ITAT Deletes ₹1.08 Crore Penalty U/s 271(1)(c): Income Disclosed in Return Filed u/s 148 and Accepted Without Any Addition Cannot Be Treated as Concealed Income
The assessee had not filed its original return of income for AY 2014-15. Upon reopening u/s 147, it filed a return in response to notice u/s 148 declaring income of ₹1.66 crore. Significantly, the AO completed the reassessment accepting the returned income in toto, without making any addition or disallowance. Nevertheless, the AO levied penalty of ₹1,08,26,994 u/s 271(1)(c), being 200% of the tax sought to be evaded, alleging concealment of income.
The CIT(A) confirmed the penalty on the reasoning that the assessee had taxable income but failed to file the original return and disclosed the income only after reassessment proceedings were initiated; hence, according to the CIT(A), the disclosure was not voluntary.
The Nagpur ITAT reversed the finding. It emphasised that there was complete identity between the income returned u/s 148 and the income ultimately assessed. Where the returned income is accepted without any variation, the foundation for invoking section 271(1)(c) is absent unless the Revenue independently establishes concealment of income or furnishing of inaccurate particulars.
