Despite detection in survey, no penalty u/s. 271(1)(c)

A survey was conducted pursuant to which certain discrepancies were found and the assessee surrendered Rs. 88.14 lakhs. In the ROI due for the financial year of survey, the assessee offered the said sum as income. The AO levied penalty u/s 271(1)(c) on the ground that the offer of income was pursuant to detection in the survey and not voluntary. The CIT(A) & Tribunal deleted the penalty. On appeal by the department to the High Court, HELD dismissing the appeal:

Though it is possible that but for detection in the survey, the assessee might not have offered the income, penalty u/s 271(1)(c) can only be levied if "in the course of proceedings" the AO is satisfied that there is "concealment" or "furnishing of inaccurate particulars". The words "in the course of proceedings" mean the assessment proceedings because there is no question of the satisfaction of the AO in survey proceedings. Further, the question whether there is "concealment" or "inaccurate particulars" has to be determined with reference to the return of income. As the assessee had offered the detected income in the return, there was neither concealment nor the furnishing of inaccurate particulars.

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