*******Income Disclosed after Income Tax Notice issued u/s 148 Notice does not attract Deemed Concealment where Reasonable Cause Exists: ITAT

https://www.taxscan.in/top-stories/income-disclosed-after-income-tax-notice-issued-us-148-notice-does-not-attract-deemed-concealment-where-reasonable-cause-exists-itat-read-order-1450379

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, deleted the penalty of Rs.55,870 levied under Section 271(1)(c) on the assessee for Assessment Year 2016-17.

Sarojben Urmishbhai Shah, the assessee, had not initially filed her return of income for Assessment Year 2016-17. Pursuant to a notice issued under Section 148, she filed a return declaring income of Rs.6,45,230. The income declared in the return was accepted in the reassessment proceedings without any addition.

However, the Assessing Officer levied penalty under Section 271(1)(c) on the ground that the assessee had not disclosed the income in the original return and had disclosed it only after reassessment proceedings were initiated.

The CIT(A) upheld the penalty.

Aggrieved, the assessee preferred an appeal before the Tribunal.

Before the Tribunal, the assessee submitted that she was a senior citizen with limited knowledge of accounts and had engaged another person for maintaining her books and filing her Income Tax Return. It was submitted that although the books had been prepared, the return was not filed due to a dispute over professional fees and the assessee became aware of the non-filing only upon receiving the notice under Section 148.

The Tribunal comprising Annapurna Gupta (Accountant Member) and Siddhartha Nautiyal (Judicial Member) observed that Explanation (3) to Section 271(1)(c) applies where an assessee fails to furnish the return without reasonable cause within the period specified under Section 153.

The Bench held that, since the assessee had shown reasonable cause for the delay, she could not be deemed to have concealed or furnished inaccurate particulars of income merely because the return was filed in response to the Section 148 notice.

Accordingly, the Tribunal deleted the penalty of Rs.55,870 and allowed the assessee’s appeal.

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Sarojben Urmishbhai Shah vs Income Tax Officer

CITATION :  2026 TAXSCAN (ITAT) 1255Case Number :  /I.T.A. No. 312/Ahd/2026Date of Judgement :  22 May 2026Coram :  ANNAPURNA GUPTA . SIDDHARTHA NAUTIYALCounsel of Appellant :  Shri Rupesh R. Shah, ARCounsel Of Respondent :  Shri Rupesh R. Shah, AR