The assessee failed to file an original return u/s 139(1) of the Act. However, the assessee voluntarily computed the income, paid the tax along with interest and intimated the same to the AO by filing a letter. Subsequently, the AO issued a notice u/s 148 of the Act. In response, the assessee filed a return of income showing the same income which was disclosed by her in the letter voluntarily filed. The AO accepted the return but levied the penalty u/s 271(1)(c) of the Act.

The ITAT observed that the AO did not make any addition but accepted the returned income of assessee and held that in the absence of any addition/disallowance resulting in enhancement of taxable income, no penalty u/s 271(1)(c) of the Act is leviable. The ITAT further observed that the AO initiated penalty u/s 271(1)(c) on the reason that the assessee had not filed return of income u/s 139(1) of the Act and held that the penalty u/s 271(1)(c) could be levied either for furnishing inaccurate particulars of income or concealing the income. The ITAT observed that the penalty u/s 271(1)(c) cannot be invoked for not filing the original return u/s 139(1). On the aforesaid observations, the ITAT deleted the penalty and allowed the appeal of the assessee. (ITA No. 201/ Mum/2023 dt. 15/05/2023)