2014 (9) TMI 955 - AT - Income Tax

Penalty u/s 271(1)(c) - claiming double depreciation - CIT(A) cancelled penalty levy - Held that - Though the CIT(A) recorded that the assessee voluntarily informed the Assessing Officer about the inadvertent mistake and filed a revised return the fact remains that it cannot be considered as a revised return. It was only upon examination of the return and the Assessing Officer having called upon the assessee to explain the discrepancy the assessee came forward to accept the default on its part. Thus it could be noticed that the order passed by the CIT(Appeals) was not only cryptic but also based on incorrect facts. As also observed that claiming double depreciation was a reporting error committed by the tax consultant whereas learned counsel for the assessee submitted before us that it was not an error on the part of the tax consultant but it was a bona fide error on the part of the assessee-company. There are many other aspects which need to be considered and appreciated properly before appreciating as to whether it can be termed as bona fide error or it amounts to furnishing of inaccurate particulars of income. Since the learned Commissioner of Income-tax (Appeals) prima facie committed an error in basing his conclusions on wrong assumption of facts we refrain from making any observation on the other aspects of the case. With these observations the order passed by the CIT (Appeals) is set aside and he is directed to reconsider the matter in accordance with law. See CIT v. Daulat Ram Rawatmull 1972 (9) TMI 9 - SUPREME Court - Decided in favour of revenue for statistical purposes.

Summary

Issues:
Penalty under section 271(1)(c) for incorrect particulars of income.

Analysis:
The case involved the imposition of a penalty under section 271(1)(c) for incorrect particulars of income. The appellant, a company engaged in the manufacture of M.S. pipes, declared total income for the relevant year but failed to add back depreciation on windmill as per the Companies Act, resulting in a double deduction claim. The Assessing Officer initiated penalty proceedings, alleging a deliberate attempt to evade taxes. The appellant contended that it was an inadvertent error and made a voluntary disclosure of the mistake. The Commissioner of Income-tax (Appeals) initially canceled the penalty, considering it a clerical error, but the Revenue appealed the decision.

The appellate tribunal noted discrepancies in the Commissioner's order and found it based on incorrect facts. The tribunal highlighted that the mistake was not due to the tax consultant but was a bona fide error by the company. The tribunal emphasized the importance of complete disclosure of facts and cited relevant case law to support the contention that inadvertent mistakes do not constitute furnishing inaccurate particulars of income. The tribunal directed the Commissioner to reconsider the matter in light of the correct facts and legal principles.

In conclusion, the tribunal allowed the Revenue's appeal for statistical purposes, setting aside the Commissioner's order and instructing a fresh consideration of the case. The decision underscored the necessity of accurate assessment based on correct facts and legal interpretations, emphasizing the distinction between inadvertent errors and deliberate attempts to evade taxes.