1. This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-I, Chandigarh dated 11.12.2014 in confirming the penalty of Rs.62,139/- levied under section 271(1)(c) of the Income Tax Act, 1961 (in short 'the Act') for assessment year 2010-11.
2. Briefly stated, the facts of the case are that the assessee filed his return of income through e-filing declaring taxable income of Rs.3,43,100/- under the heads 'income from house property' and 'income from other sources'. Subsequently, the case was selected for scrutiny assessment through CASS. The Assessing Officer framed the assessment under section 143(3) of the Act on 30.1.2013, wherein the amount of Rs.2,90,572/- on account of un-disclosed house property income was added to the total income of the assessee. Thus, net income of Rs.2,03,400/- was added to the income of the assessee after allowing deduction under section 24(a) of the Act. The Assessing Officer initiated the penalty proceedings under section 271(1)(c) of the Act and a show cause notice was issued to the assessee. In response to the said notice issued by the Assessing Officer, the assessee submitted written reply dated 25.7.2013, which reads as under :
"In respect of addition of Rs. 2,90, 572/- we want to reiterate that it was a voluntary surrender by our client during the course of assessment proceedings. This was not a deliberate mistake by our assessee to conceal income instead, it was purely of a mistake on the part of assessee's accountant which could not be checked by the assessee and he was unaware of such mistake. When our client came to knew about the mistake, he filed a revised return which could not be accepted because original return was filed late. It can also be seen from the previous year returns of our assessee that he was offering the whole rent received for taxation. The mistake in return of income was bona fide and no mala fide intention can be drawn in the above mentioned case. Various Hon'ble tribunals and Hon'ble Court's had already upheld the fact that no penalty for concealment is warranted in case of bona fide mistakes. Therefore Penalty under Section 271 (l)( c) is absolutely not warranted in this case."
3. The Assessing Officer has stated that in respect of SCO 230-31, Sector 34, Chandigarh, no rental income was declared. The Assessing Officer vide his order dated 23.11.2012 asked the assessee to furnish floor-wise rental income in respect of two showrooms. However, the assessee also admitted that inadvertently the rent received amounting to Rs.2,90,572/- was not included in the rental income, as deduction of tax at source was not deducted thereon by the tenants, as such rent received was omitted to be taken into account. The Assessing Officer has stated that the assessee surrendered the income of Rs.2,90,572/-, which was added to the total income of the assessee. The Assessing Officer took a view that the assessee has deliberately concealed his particulars of income from house property and furnished inaccurate particulars of his income. Consequently, the Assessing Officer imposed a penalty of Rs.62,139/- under section 271(1)(c) of the Act.
4. On appeal, the learned CIT (Appeals) confirmed the penalty, and hence the assessee is in appeal before the Tribunal.
5. I have heard S/Shri K.C. Jain and Shaman Jain, learned counsels for the assessee and Shri Jitender Kumar, learned D.R. at length and have also perused the materials available on record. The original return was filed on 31.3.2011, wherein the assessee had declared rental income of only first floor of showroom No.839-40, Sector 22-A, Chandigarh. However, the assessee had not declared rental income of the remaining floor. The explanation of the assessee was that he had suo-moto revised the return on 26.4.2011, wherein he had included the rental income of Rs.2,90,572/-. The assessment was completed under section 143(3) of the Act. The learned counsel for the assessee submitted that the assessee himself voluntarily declared additional income in the revised return dated 26.4.2011. No detection of concealed income was made by the Revenue Authorities and, therefore, penalty under section 271(1)(c) of the Act is not leviable. The learned D.R for the Revenue, on the other hand, submitted that in the instant case, the original return was filed on 31.3.2011 and the same was not filed in time and so any subsequent return filed by the assessee has to be ignored, which is what precisely the Assessing Officer has done. He further submitted that the original return was not filed under section 139(1) of the Act and, therefore, the return filed subsequently on 26.4.2011 cannot be treated as revised return . Therefore, the Assessing Officer was justified in levying the penalty under section 271(1)(c) of the Act. It is relevant to observe here that the Assessing Officer has omitted to make the mention of revised return filed by the assessee on 26.4.2011. However, it is true that the return submitted on 26.4.2011 cannot be considered as revised return filed under section 139(5) of the Act. At the same time, it is not the case where the rental income not shown in the original return was detected by the Revenue Authorities. Admittedly, the assessee offered the rental income on 26.4.2011 and paid the taxes thereon before any detection of concealment by the Revenue Authorities. No notice or query was raised regarding the rental income offered by the assessee for taxation on 26.4.2011. Therefore, it cannot be said that the assessee either concealed the income or furnished the inaccurate particulars of income. In this case, the rental income inadvertently omitted in the original return was voluntarily offered for taxation during the course of assessment proceedings. The learned counsel for the assessee submitted that during the course of assessment proceedings, the assessee realized its mistake and pointed out the same to the Assessing Officer. In the case of CIT v. Somany Evergree Knits Ltd.[2013] 352 ITR 592/35 taxmann.com 529/218 Taxman 27 (Mag.) (Bom), the Hon'ble Bombay High Court while dismissing the appeal of the assessee held as under :
"(iii) The grievance of the revenue is that penalty is justified in view of the fact that the respondent-assessee had not filed a revised return of income. However, the Tribunal noted that the time to file revised return had expired. In any event, even the revenue does not dispute that it was a bona fide mistake on the part of the respondent-assessee. In the above view, imposition of penalty upon the respondent-assessee is not warranted."
6. In the above case, the assessee sold its garment assets and claimed loss of Rs.21.68 lacs thereon as revenue expenditure in its return. In the course of assessment proceedings, the assessee realized its mistake and withdrew the loss. The Assessing Officer accepted the withdrawal and completed the assessment but imposed penalty under section 271(1)(c) of the Act. The Tribunal deleted the penalty stating that the claim for deduction made by the assessee on account of a bona fide mistake and in such circumstances, the levy of penalty was justified. In the said case, the mistake was rectified during the assessment proceedings since the time to file the revised return was expired. However, during the course of assessment proceedings, the assessee realized its mistake and pointed out the same to the Assessing Officer. In the instant case also, during the course of assessment proceedings, the assessee realized its mistake and pointed out the same to the Assessing Officer. There was no detection of concealed income by the Revenue Authorities. The assessee voluntarily offered the rental income of Rs.2,90,572/- for taxation and the same was accepted by the Assessing Officer in the assessment order dated 30.1.2013 passed under section 143(3) of the Act. Considering the entire facts and circumstances of the present case and also keeping in view the decision of the Hon'ble Bombay High Court referred to above, I am of the opinion that in the facts and circumstances of the present case, no penalty under section 271(1)(c) of the Act can be validly levied. Therefore, I cancel the penalty of Rs.62,139/- levied by the Assessing Officer and confirmed by the learned CIT (Appeals).
7. In the result, the appeal of the assessee is allowed.