I left the surrendered cash out of my original return and brought it in only by a revised return under s.139(5). Does the proviso to s.271AAC(1) still protect me?
On this decision, yes. The Jaipur Bench held that once a revised return is filed the original stands withdrawn and is substituted by the revised return, so where the revised return has been accepted as a return under s.139 the proviso to s.271AAC(1) is answered and the penalty cannot stand.
Decided by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member — Income Tax Appellate Tribunal, Jaipur Benches) on 2025-07-04, reported as ITA No. 406/JP/2025. It bears on section 271AAC, section 115BBE, section 139, section 139(5), section 133A, section 147, section 148 of the Income Tax Act 1961, in Penalty and Cash Credits & Unexplained Money matters.
This is the demonetisation-survey fact pattern that produced a great many s.271AAC penalties, and it is the counterpart to Rohit Khandelwal: Patna held that a belated return under s.139(4) is a return under s.139, and Jaipur held the same of a revised return under s.139(5). Together they make the point that the proviso's reference to s.139 is not confined to s.139(1). But be candid about the weakness. On these dates the tax under s.115BBE was paid on 23 February 2018, which is after 31 March 2017, the end of the previous year relevant to AY 2017-18, and the proviso in terms requires payment on or before the end of the relevant previous year. The Tribunal's reasoning goes only to whether a revised return counts as a return under s.139; it does not engage with the timing limb. A practitioner who leads with this case is relying on a decision that records the very requirement his facts fail — the order sets the proviso out and notes that the tax went in after the end of the previous year — and then gives no finding on it at all. It is worth citing, but cite it knowing that, and pair it with whatever you have on the payment dates.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The assessee carried on a wholesale business in biris and matches. During the demonetisation period he deposited Rs 2,07,20,000 in his business bank account. A survey under s.133A was carried out on 12 February 2018, which brought out abnormal cash sales recorded on 8 November 2016. Unable to explain Rs 27,00,000 of the deposits, the assessee surrendered that amount for taxation in AY 2017-18. His original return for AY 2017-18 had been filed on 6 September 2017 declaring income of Rs 15,30,170. He filed a revised return on 27 February 2018 declaring Rs 42,30,170, taking in the surrendered amount, and paid tax under s.115BBE on 23 February 2018. The assessment was completed under s.147 read with s.143(3), pursuant to a notice under s.148, by order dated 27 May 2021 at Rs 42,30,170, that is, at the revised returned figure. The AO nevertheless levied penalty of Rs 1,62,000 under s.271AAC(1), the surrendered amount not having been in the original return.
Appeal allowed and the penalty of Rs 1,62,000 under s.271AAC(1) deleted. Where a revised return has been filed and has been accepted as a return under s.139 of the Act, the requirement of the proviso to s.271AAC(1) that the income be included in the return of income furnished under s.139 is satisfied, and no penalty under s.271AAC survives.
The Tribunal proceeded on the distinction between a revised return and a mere correction of a return, relying on the Gujarat High Court decision in PCIT-1 v. Babubhai Ramanbhai Patel for the proposition that once a revised return is filed the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. It read the proviso to s.271AAC(1) together with s.115BBE and observed that both provisions speak of s.139 without confining themselves to any sub-section of it. Applying that reading to the facts, the assessee had revised his return, the revised return had been accepted as a return under s.139, and the assessment had been framed on the revised figure. In those circumstances the Tribunal saw no reason to sustain the penalty and directed its deletion.
we see no reason to sustain the penalty and therefore, the same is directed to be deleted
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppOn this decision, yes. The Jaipur Bench held that once a revised return is filed the original stands withdrawn and is substituted by the revised return, so where the revised return has been accepted as a return under s.139 the proviso to s.271AAC(1) is answered and the penalty cannot stand. This was decided by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member — Income Tax Appellate Tribunal, Jaipur Benches) and bears on section 271AAC, section 115BBE, section 139, section 139(5), section 133A, section 147, section 148 of the Income Tax Act 1961. It is reported as ITA No. 406/JP/2025. This is the demonetisation-survey fact pattern that produced a great many s.271AAC penalties, and it is the counterpart to Rohit Khandelwal: Patna held that a belated return under s.139(4) is a return under s.139, and Jaipur held the same of a revised return under s.139(5). Together they make the point that the proviso's reference to s.139 is not confined to s.139(1). But be candid about the weakness. On these dates the tax under s.115BBE was paid on 23 February 2018, which is after 31 March 2017, the end of the previous year relevant to AY 2017-18, and the proviso in terms requires payment on or before the end of the relevant previous year. The Tribunal's reasoning goes only to whether a revised return counts as a return under s.139; it does not engage with the timing limb. A practitioner who leads with this case is relying on a decision that records the very requirement his facts fail — the order sets the proviso out and notes that the tax went in after the end of the previous year — and then gives no finding on it at all. It is worth citing, but cite it knowing that, and pair it with whatever you have on the payment dates. If it applies to you, the first step is this: Establish that the revised return was filed within the time allowed by s.139(5) and that the AO in fact assessed on the revised return — the Tribunal's reasoning turned on the revised return having been accepted as a return under s.139.
The assessee carried on a wholesale business in biris and matches. During the demonetisation period he deposited Rs 2,07,20,000 in his business bank account. A survey under s.133A was carried out on 12 February 2018, which brought out abnormal cash sales recorded on 8 November 2016. Unable to explain Rs 27,00,000 of the deposits, the assessee surrendered that amount for taxation in AY 2017-18. His original return for AY 2017-18 had been filed on 6 September 2017 declaring income of Rs 15,30,170. He filed a revised return on 27 February 2018 declaring Rs 42,30,170, taking in the surrendered amount, and paid tax under s.115BBE on 23 February 2018. The assessment was completed under s.147 read with s.143(3), pursuant to a notice under s.148, by order dated 27 May 2021 at Rs 42,30,170, that is, at the revised returned figure. The AO nevertheless levied penalty of Rs 1,62,000 under s.271AAC(1), the surrendered amount not having been in the original return. The matter was decided on 2025-07-04 by the ITAT (Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member — Income Tax Appellate Tribunal, Jaipur Benches). On those facts the ITAT held as follows. Appeal allowed and the penalty of Rs 1,62,000 under s.271AAC(1) deleted. Where a revised return has been filed and has been accepted as a return under s.139 of the Act, the requirement of the proviso to s.271AAC(1) that the income be included in the return of income furnished under s.139 is satisfied, and no penalty under s.271AAC survives.
The Tribunal proceeded on the distinction between a revised return and a mere correction of a return, relying on the Gujarat High Court decision in PCIT-1 v. Babubhai Ramanbhai Patel for the proposition that once a revised return is filed the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment. It read the proviso to s.271AAC(1) together with s.115BBE and observed that both provisions speak of s.139 without confining themselves to any sub-section of it. Applying that reading to the facts, the assessee had revised his return, the revised return had been accepted as a return under s.139, and the assessment had been framed on the revised figure. In those circumstances the Tribunal saw no reason to sustain the penalty and directed its deletion. In the words reproduced by the source cited on this page: "we see no reason to sustain the penalty and therefore, the same is directed to be deleted" The decision followed or applied PCIT-1 v. Babubhai Ramanbhai Patel (Gujarat High Court) — relied on for the proposition that a revised return withdraws and substitutes the original; not itself read for this entry.
It was decided by the ITAT on 2025-07-04 and is reported as ITA No. 406/JP/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(5), section 133A, section 147, section 148, 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 of Rs 1,62,000 under s.271AAC(1) deleted. Where a revised return has been filed and has been accepted as a return under s.139 of the Act, the requirement of the proviso to s.271AAC(1) that the income be included in the return of income furnished under s.139 is satisfied, and no penalty under s.271AAC survives. It arises in Penalty and Cash Credits & Unexplained Money matters, on section 271AAC, section 115BBE, section 139, section 139(5), section 133A, section 147, section 148 of the Income Tax Act 1961, and was decided by Dr. S. Seethalakshmi, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member — Income Tax Appellate Tribunal, Jaipur Benches. 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. Put the withdrawal-and-substitution proposition on record, citing the Gujarat High Court decision in PCIT-1 v. Babubhai Ramanbhai Patel on which the Tribunal relied, and read it yourself before you rely on it. Separate the two limbs of the proviso in your submission and address the payment timing squarely; if the s.115BBE tax went in after the end of the previous year, say so and argue why the proviso should still apply rather than leaving the AO to find it. Where advance tax covering the surrendered amount was paid before 31 March of the previous year, put the challans in — that satisfies the proviso on its face and takes the case out of this decision's weak spot. Take the s.271AAC(2) point in parallel where a s.270A penalty is also running on the same income.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing. A case-name search returns 19 documents, all Rajasthan High Court matrimonial proceedings involving a person of the same name. Nothing treats the holding that a revised return substitutes the original for the purposes of the s.271AAC proviso, and no s.260A appeal was traced. 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 concluding sentence quoted below was confirmed by exact-phrase retrieval — the phrase "we see no reason to sustain the penalty" returned six documents on indiankanoon, this order among them — and the sentence came back identically on two separate ?type=print fetches. I could not obtain a render that gave the Tribunal's concluding paragraph a stable number, so the quote is attributed to the concluding paragraph rather than to a numbered one. The order relies on the Gujarat High Court in PCIT-1 v. Babubhai Ramanbhai Patel; I did NOT retrieve or read that judgment, so the proposition attributed to it here is reported as the Tribunal reported it and nothing more. The most important gap is in the decision itself, and it is a gap of engagement rather than of information. The order records the timing point three times — that the s.115BBE tax was deposited on 23.02.2018, "i.e, after the end of the relevant FY 2016-17"; that the penalty proceedings were initiated precisely because the taxes "were paid after the end of the relevant previous year"; and that the benefit is "available if taxes are paid u/s 115BBE before the end of relevant previous year" — and it extracts the proviso in full. The Tribunal nevertheless deleted the penalty on the revised-return reasoning alone and gave no finding on the payment-timing limb. It therefore did not fail to notice the limb; it did not deal with it. That is a stronger criticism of the order, not a weaker one, and a reader relying on it should expect the Revenue to say the decision is per incuriam on that limb. 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 of Rs 1,62,000 under s.271AAC(1) deleted. Where a revised return has been filed and has been accepted as a return under s.139 of the Act, the requirement of the proviso to s.271AAC(1) that the income be included in the return of income furnished under s.139 is satisfied, and no penalty under s.271AAC survives.
TaxSphere, “Shankar Lal Ludhani v DCIT, Central Circle, Ajmer”, https://taxnotice.vittsphere.com/caselaw/case/shankar-lal-ludhani-v-dcit-271aac-revised-return-substitutes-original/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The addition under the s.68 group has been confirmed and I never showed the income in my return. Is there any discretion left to the AO not to levy the s.271AAC penalty?
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?
My demonetisation cash deposit was added for the year ended 31 March 2017 and taxed at 60% under section 115BBE. Can that rate reach income of that year?
You want to make a claim you missed, but the time to revise the return has gone. Can you just write to the officer?
