2015 (10) TMI 2497 - AT - Income Tax

Penalty u/s 271(1)(c) - claim of capital gain tax, property tax and fringe benefit tax not an allowable deduction - CIT(A) deleted the penalty - Held that - It is observed that the assessee is a Cooperative society and an undertaking to Government of Punjab. It is claimed that the assessee had engaged a professional for preparing and filing of the income tax return. It is stated that assessee has submitted revised computation during the course of assessment proceedings and there was no intention to conceal the income. Furthermore, the assessee had duly paid tax on the impugned amounts of capital gains tax and property tax sue motto, but due to inadvertent mistake on the part of the counsel, this amount of capital gains tax and property tax paid were not added back resulting into refund. In our view, the Ld. CIT(A) has correctly observed that the mistake of not adding back the impugned amounts in the statement of income was of the then counsel and moreover it cannot be said that anyone had been benefitted by not adding back the impugned amount, since the assessee is an undertaking of Government of Punjab. In our opinion, the order of CIT(A) is based on appreciation of facts and therefore, we decline to interfere with the order of CIT(A). - Decided against revenue

Summary

Issues:
- Penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The judgment pertains to an appeal filed by the Revenue against the order of CIT(A), Chandigarh, canceling a penalty of Rs. 61,13,801 imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2010-11. The Assessing Officer made additions to the income of the assessee for claiming expenses related to capital gain tax, property tax, and fringe benefit tax in the profit and loss account. The assessee added back the fringe benefit tax amount in the computation of income. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The assessee contended that the revised computation was filed during assessment proceedings due to technical issues with E-filing and there was no intention to conceal income. However, the Assessing Officer imposed the penalty, which was later canceled by the CIT(A).

On appeal, the CIT(A) observed that the mistake of not adding back the impugned amounts in the statement of income was due to the counsel's error, and it was a bonafide mistake. The appellant, a cooperative society under the Government of Punjab, did not benefit from this error. The CIT(A) allowed the grounds of appeal, canceling the penalty. The Tribunal noted that the assessee engaged a professional for tax return preparation and filing, and the inadvertent mistake was on the part of the counsel. The Tribunal agreed with the CIT(A)'s findings, stating that no one had benefited from the error, considering the nature of the appellant as a government undertaking. Consequently, the Tribunal declined to interfere with the CIT(A)'s order, and the appeal by the Revenue was dismissed. The order was pronounced in open court on 26.10.2015.