When Validly Revised Return filed pursuant to notice u/s 153A, is accepted, Defects found in Original Return cannot be considered for Imposing Penalty: ITAT [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) in M/s OSE Infrastructure Ltd. Versus ACIT, held that when a revised return is accepted as per issue of notice under section 153A and the defects found in the original return cannot hold penalty.

In the instant case Assessee filed a huge loss substantially reduced pursuant to the issue of notice under section 153A and declared reduced loss as nil income which arose chaos as concealment of income by filing inaccurate particulars.

Assessing Officer initiated levy of penalty by order being the 100% of the tax sought to be evaded. The assessee filed an appeal before CIT (A) which was dismissed by the authority. Hence Assessee approached this division bench stating that no evidence was found against assessee during the course of search and seizure operation.

The counsel for Assessee placed various contentions, firstly regarding the notice which doesn’t say under which limb of section 271(1)(C )the penalty was proposed. Secondly stated that when the return revised persuant to the notice and validly revised and the assessment completed accepting the revised return then no penalty could be levied. Lastly, counsel for Assessee added that no incriminating documents, asset or income found during the course of search.

Finally, the bench including President GD Agrawal and Judicial member Narasimha Chary heard the rival submission and perused the documents available on records. The bench raised a statement that from the assessment order it is not clear that as to whether it was concealment of income or furnishing of inaccurate particulars.

Accordingly, the bench observed that “when the revised return is accepted and the income is assessed as per the revised income, there is no scope for penalty.”

The bench pressed the decision of Kirit Dahyabhai Patel vs ACIT where High court held that “the return of income filed in response to notice under section 153(A) is termed as return filed under section 139 and officer made assessment on said revised return and the penalty is to be levied on the income assessed over and above the income returned under section 153A of the Income Tax Act, if any.”