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Judgment
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s order dated 02.09.2025 passed in DIN and order No. ITBA/NFAC/S/250/2025-26/1080278322(1), involving proceedings under section 147 r.w.s. 144B of the Income-tax Act, 1961; hereinafter referred to as ‘the Act’.
Heard both the parties. Case file perused.
The assessee submits at the outset during the course of hearing that the learned Assessing Officer had issued section 274 r.w.s 270A notice alleging it to have “under reported income which is in consequence of misreporting thereof” than having specified the corresponding limb to the very effect as prescribed in sub-section 9 read with clauses “a” to “f” thereof. The relevant penalty notice dated 08.09.2022also forms part of the case records before us.
This clinching factual position has gone unrebutted from the Revenue side. This tribunal’s recent decision in 2025 180 taxmann.com 395(Del- Trib.) DCIT vs Ajay Vision (P) Ltd has settled the very issue that such a failure in the learned Assessing Officer’s part indeed vitiates the impugned penalty; reading as under:
4.2.12. 1 The Assessing Officer has issued notice u/s 274 proposing for levy of penalty for concealment of particulars of income. From the reading of the assessment order paragraph No. 15, the Assessing Officer disallowed the amount which is already been a part of the returned income. For the immediate reference, the relevant paragraph is reproduced below:-
"15."The assessee company filed its reply and stated that the unrecorded cash income to the tune of Rs, 98,59,655/-has already included in its ITR in response to notice u/s 148 of the IT Act, 1961. Therefore, the said income amounting to Rs. 98,59,655/- are hereby disallowed for penalty purpose as the assessee added the same in its total income for the year under consideration ie. AY 2016-17.
16.In view of the above facts, I am also satisfied that the assessee has concealed his income to the tune of Rs. 98,59,655/- within the meaning of section 271(1)(c) of the Income Tax Act. 1961. Accordingly, penalty proceedings w/s 271(1)(c) are being initiated separately".
4.2.12.2 The fascinating fact is that the Assessing Officer has disallowed the taxable amount included in the return for the purpose of penalty is a new beginning for the strangest interpretation of the tax jurisprudence in invoking the penal provisions. Be that as it may, the Assessing Officer after "disallowing" the amount, initiated proceedings for concealment. If at all, any amount disallowed, at the most invite penalty for furnishing inaccurate particulars of income. To that extent, the notice issued by the Assessing Officer suffers from insufficiency of charge proposed and leviable. The difference between 'concealment' and 'furnishing of inaccurate particulars of income has been well analysed in the case of CIT v. Indian Metals and Ferro Alloys Ltd. by the Hon'ble High Court of Orissa, ITA no. 211/Orissa/1995. It was held that the expression "concealed the particulars of income" and 'has furnished inaccurate particulars of income have not been defined either in Section 271(1)(c) or elsewhere in the Act. One thing is certain that these two circumstances are not identical in detail although they may lead to the same effect, namely, keeping off a certain portion of income. The former is direct and the latter may be indirect in its execution. The word "conceal" is derived from the Latin concelare which implies to hide. It was held that the Webster in his New International Dictionary equates its meaning to hide or withdraw from observation, to cover or to keep from sight, to prevent the discovery of; to withhold knowledge of. The offence of 'concealment' is thus a direct attempt to hide an item of income or portion thereof from the knowledge of income-tax authorities. In furnishing its return of income an assessee is required to furnish particulars and accounts on which the return income has been arrived at. These may be particulars as per its books of account, if he has maintained them, or any other basis upon which it had arrived at the returned figure of income. Any 'inaccuracy' made in such books of account or otherwise which resulted in keeping off or hiding a portion of its income is punishable as "furnishing inaccurate particulars of its income"
9.The CIT(A) relied on the decision of Delhi High Court in the case of Pr. CIT. Neeraj Jindal (2022) wherein it held that penalty under section 271(1)(c) cannot be levied simply because income was disclosed in a 132(4) proceeding if the assessee voluntarily discloses it during the assessment The court emphasized that for a penalty, there must be clear evidence of an attempt to conceal. The CIT(A) also relied on the decision of CIT v. Mahendra C. Shah [2008] 172 Taxman 58/299 ITR 305 (Gujarat) of Gujarat High Court wherein it was held that penalty cannot levied if income offered under section 148/153A. The Gujarat High Court held that where an assessee voluntarily discloses income during search and the income is accepted without further investigation, it cannot be concluded that there was concealment. The court opined that the purpose of disclosure in response to section 153A notice is to provide a fair opportunity to the assessee, and if income is voluntarily disclosed, penalties should not apply.
10.We are of the considered view that in the given factual matrix, there is no reason to interfere with the decision of the CIT(A). Accordingly, we direct the AO to delete the penalty. The grounds of appeal are dismissed.
ITA No. 4173/DEL/2025 [A.Y 2018-19]
ITA No. 4174/DEL/2025 [A.Y 2017-18]
ITA No. 4175/DEL/2025 [A.Y 2019-20]
11.The above three appeals are against the penalty order u/s 270A of the Income Tax Act. The CIT(A) has dealt with issue as under:
We adopt the above extracted detailed reasoning mutatis mutandis to delete the impugned penalty in very terms.
This assessee’s appeal is allowed.