Archana Achyut Sail Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has set aside penalties imposed on Archana Achyut Sail, a retired Mahanagar Telephone Nigam Limited (MTNL) employee, for alleged income concealment and misreporting for the assessment years (AY) 2016-17 and 2017-18. The Tribunal’s decision, delivered on March 25, 2025, emphasizes the principle that no penalty should be levied if no additions are made to the income declared in response to a Section 148 notice, and highlights the discretionary nature of penalty imposition.
The case originated from a survey conducted on September 30, 2018, at the premises of Tax Return Preparer (TRP) Vijay Sawant, who handled Archana Sail’s income tax returns, along with those of other MTNL employees. Incriminating material was reportedly impounded, and statements recorded from Sawant and two of his clients suggested suppression or misreporting of salary components and claims for inadmissible deductions/exemptions. For Archana Sail, irregularities were specifically alleged in claiming deductions under Chapter VIA, particularly for House Rent Allowance (HRA), and the suppression of other income heads.
Following these findings, Archana Sail’s cases for AY 2016-17 and 2017-18 were reopened with notices issued under Section 148 of the Income Tax Act, 1961. In response, on August 16, 2022, she filed revised Returns of Income (RoI) for both years, declaring higher total incomes. For AY 2016-17, she declared ₹11,01,739/-, and for AY 2017-18, ₹10,89,011/-. Crucially, the assessments completed on April 26, 2023, under Section 147 read with Section 144B, confirmed the incomes as declared in these revised returns, meaning no further additions were made by the Assessing Officer (AO).
