I disclosed the seized cash and paid the s.115BBE tax, but my return was a belated one under s.139(4). The AO says the proviso to s.271AAC(1) only saves a return under s.139(1). Is he right?
No. The proviso says "return of income furnished under section 139" and does not confine itself to s.139(1); the Tribunal held that where the legislature meant a particular sub-section it said so, and deleted the penalty on a belated return filed under s.139(4).
Decided by the ITAT (Shri George Mathan, Judicial Member and Shri Sanjay Awasthi, Accountant Member — Income Tax Appellate Tribunal, Patna Bench (hearing conducted virtually from Kolkata)) on 2025-02-27, reported as ITA No. 33/PAT/2025. It bears on section 271AAC, section 115BBE, section 139, section 139(4), section 142(1) of the Income Tax Act 1961, in Penalty and Cash Credits & Unexplained Money matters.
The proviso to s.271AAC(1) is the whole defence to this penalty and it is routinely missed, so a decision on what it means is worth more than a decision on the merits of the addition. This one settles the first of the proviso's two limbs — that the return need not be the original return under s.139(1). Read it with its limits clearly in view. The proviso has a SECOND requirement, that the tax under s.115BBE be paid on or before the end of the relevant previous year, and this order does not discuss it: the cash was intercepted on 6 October 2020, falling in the previous year ended 31 March 2021, while the return and the tax came in February 2022. So a reader whose facts are the same is relying on a decision that answered the sub-section question and passed over the timing question. That is exactly the ground on which the Revenue will resist, and the practitioner should know it before he leads with this case. Note also that the same conclusion was reached, on a revised return under s.139(5), by the Jaipur Bench in Shankar Lal Ludhani.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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Cash of Rs 1,11,05,650 belonging to the assessee was intercepted on 6 October 2020 in the course of vehicle checking. The relevant assessment year is 2021-22. A notice under s.142(1) was issued on 25 January 2022. The assessee filed his return of income on 20 February 2022 under s.139(4), disclosing the intercepted cash and paying tax on it under s.115BBE. The assessment was completed on 23 March 2022. The AO nevertheless levied penalty under s.271AAC(1), taking the view that the immunity in the proviso is available only where the income has been included in a return furnished under s.139(1), and that a belated return under s.139(4) does not qualify.
Appeal allowed and the penalty under s.271AAC(1) deleted. The proviso to s.271AAC(1) refers to a return of income furnished under s.139 without specifying any sub-section, and cannot be read as confined to s.139(1). The assessee having filed his return of income disclosing the amount and having complied with what the proviso requires, the penalty was unsustainable.
The Tribunal extracted the proviso to s.271AAC(1) and read its words as they stand. The section referred to in the proviso is s.139, and it does not specify s.139(1) or s.139(4). Where the legislature intended to fasten on a particular sub-section it did so expressly, and the Tribunal pointed to s.142(1) as an instance of that drafting practice within the same statute. It followed that s.139 in the proviso could not be read down to mean s.139(1) alone, and that a return furnished under s.139(4) is a return furnished under s.139 for the purposes of the proviso. On the facts, the assessee had filed his return of income and complied with what the proviso required, and the penalty accordingly fell.
The section referred to in the proviso is section 139 which does not specify 139(1) or 139(4).
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Handle my notice → Ask a CA on WhatsAppNo. The proviso says "return of income furnished under section 139" and does not confine itself to s.139(1); the Tribunal held that where the legislature meant a particular sub-section it said so, and deleted the penalty on a belated return filed under s.139(4). This was decided by the ITAT (Shri George Mathan, Judicial Member and Shri Sanjay Awasthi, Accountant Member — Income Tax Appellate Tribunal, Patna Bench (hearing conducted virtually from Kolkata)) and bears on section 271AAC, section 115BBE, section 139, section 139(4), section 142(1) of the Income Tax Act 1961. It is reported as ITA No. 33/PAT/2025. The proviso to s.271AAC(1) is the whole defence to this penalty and it is routinely missed, so a decision on what it means is worth more than a decision on the merits of the addition. This one settles the first of the proviso's two limbs — that the return need not be the original return under s.139(1). Read it with its limits clearly in view. The proviso has a SECOND requirement, that the tax under s.115BBE be paid on or before the end of the relevant previous year, and this order does not discuss it: the cash was intercepted on 6 October 2020, falling in the previous year ended 31 March 2021, while the return and the tax came in February 2022. So a reader whose facts are the same is relying on a decision that answered the sub-section question and passed over the timing question. That is exactly the ground on which the Revenue will resist, and the practitioner should know it before he leads with this case. Note also that the same conclusion was reached, on a revised return under s.139(5), by the Jaipur Bench in Shankar Lal Ludhani. If it applies to you, the first step is this: Quote the proviso as it stands: it refers to "section 139", not "section 139(1)". Put the bare words in front of the officer before you argue anything else.
Cash of Rs 1,11,05,650 belonging to the assessee was intercepted on 6 October 2020 in the course of vehicle checking. The relevant assessment year is 2021-22. A notice under s.142(1) was issued on 25 January 2022. The assessee filed his return of income on 20 February 2022 under s.139(4), disclosing the intercepted cash and paying tax on it under s.115BBE. The assessment was completed on 23 March 2022. The AO nevertheless levied penalty under s.271AAC(1), taking the view that the immunity in the proviso is available only where the income has been included in a return furnished under s.139(1), and that a belated return under s.139(4) does not qualify. The matter was decided on 2025-02-27 by the ITAT (Shri George Mathan, Judicial Member and Shri Sanjay Awasthi, Accountant Member — Income Tax Appellate Tribunal, Patna Bench (hearing conducted virtually from Kolkata)). On those facts the ITAT held as follows. Appeal allowed and the penalty under s.271AAC(1) deleted. The proviso to s.271AAC(1) refers to a return of income furnished under s.139 without specifying any sub-section, and cannot be read as confined to s.139(1). The assessee having filed his return of income disclosing the amount and having complied with what the proviso requires, the penalty was unsustainable.
The Tribunal extracted the proviso to s.271AAC(1) and read its words as they stand. The section referred to in the proviso is s.139, and it does not specify s.139(1) or s.139(4). Where the legislature intended to fasten on a particular sub-section it did so expressly, and the Tribunal pointed to s.142(1) as an instance of that drafting practice within the same statute. It followed that s.139 in the proviso could not be read down to mean s.139(1) alone, and that a return furnished under s.139(4) is a return furnished under s.139 for the purposes of the proviso. On the facts, the assessee had filed his return of income and complied with what the proviso required, and the penalty accordingly fell. In the words reproduced by the source cited on this page: "The section referred to in the proviso is section 139 which does not specify 139(1) or 139(4)."
It was decided by the ITAT on 2025-02-27 and is reported as ITA No. 33/PAT/2025. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 271AAC, section 115BBE, section 139, section 139(4), section 142(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Appeal allowed and the penalty under s.271AAC(1) deleted. The proviso to s.271AAC(1) refers to a return of income furnished under s.139 without specifying any sub-section, and cannot be read as confined to s.139(1). The assessee having filed his return of income disclosing the amount and having complied with what the proviso requires, the penalty was unsustainable. It arises in Penalty and Cash Credits & Unexplained Money matters, on section 271AAC, section 115BBE, section 139, section 139(4), section 142(1) of the Income Tax Act 1961, and was decided by Shri George Mathan, Judicial Member and Shri Sanjay Awasthi, Accountant Member — Income Tax Appellate Tribunal, Patna Bench (hearing conducted virtually from Kolkata). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Show the contrast the Tribunal drew — that where the Act means a sub-section it says so, as it does with s.142(1) — and point to the drafting difference. Produce the return acknowledgement and the challan, and establish that the income was included in the return and the tax under s.115BBE actually paid. Deal with the timing limb yourself rather than waiting for the AO to raise it: state when the s.115BBE tax was paid against the end of the relevant previous year, and if it was paid later, say so and argue the point openly. Where advance tax or self-assessment tax was in fact paid before 31 March of the previous year, lead with that — on those facts the proviso is satisfied on its own terms and no interpretive argument is needed. Check whether s.271AAC(2) has been overlooked: no penalty under s.270A may be imposed on the same income, so if a s.270A penalty is also running on the same addition, take that point too.
Validity check could not be completed. Validity check could not be completed. I did not search for an appeal against this order or for later decisions following or doubting it, and no such check should be assumed. The Jaipur Bench reached the same conclusion on a revised return under s.139(5) in Shankar Lal Ludhani (ITA No. 406/JP/2025, 4 July 2025), which is consistent but is a coordinate bench, not authority binding on anyone. No High Court decision on the meaning of "furnished under section 139" in this proviso was located. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The quoted sentence was confirmed by exact-phrase retrieval on indiankanoon: the phrase "The section referred to in the proviso is section 139" returned exactly one document, this one, and no other. The order is short and the facts are stated compactly; it records the return as filed on 20 February 2022 under s.139(4) disclosing the intercepted cash and paying tax under s.115BBE, but the text I could read does not give a separate date for the payment of the s.115BBE tax, and it does not name the deeming section (s.68, s.69A or another) under which the addition was made, so neither is stated in the facts below. The order does not address the second limb of the proviso — payment of the s.115BBE tax on or before the end of the relevant previous year — at all; on the dates recorded, the previous year ended 31 March 2021 and the return and payment came in February 2022. That silence is a real gap in the decision and is flagged rather than papered over. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Appeal allowed and the penalty under s.271AAC(1) deleted. The proviso to s.271AAC(1) refers to a return of income furnished under s.139 without specifying any sub-section, and cannot be read as confined to s.139(1). The assessee having filed his return of income disclosing the amount and having complied with what the proviso requires, the penalty was unsustainable.
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