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Issues involved: Appeal against penalty u/s 271(1)(c) upheld by CIT(A) for non-payment of interest amount u/s 43B.
Summary: The appellant challenged the first appellate order upholding the penalty imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income Tax Act at Rs. 4,04,232. The AO levied the penalty based on an addition of Rs. 13,47,443 due to non-payment of interest by the due date for filing the income tax return u/s 139. The CIT(A) upheld the penalty, considering the explanation provided by the appellant as ignorance of law and inadvertence by the tax consultant, which was deemed a lame excuse. The Tribunal heard arguments from both parties and reviewed relevant decisions. The appellant's representative reiterated submissions made before the CIT(A) and presented an affidavit from the tax auditor acknowledging the mistake in not including the unpaid interest amount in the income computation due to ignorance of the amended provisions of Section 43B(e). The representative argued that the mistake was bona fide as it was the first year of implementing the amendment. The appellant relied on various decisions to support their case. The Departmental Representative (D.R.) contended that ignorance of law cannot justify the mistake and argued that the appellant and their counsel should be considered as one entity. The D.R. highlighted a specific case where the penalty was upheld due to similar circumstances. After reviewing the cited decisions, the Tribunal found that in comparable cases, penalties were deleted based on the bonafide nature of the mistakes. Citing precedents, the Tribunal concluded that the mistake made by the tax consultant was bonafide, and the penalty should be deleted. Therefore, the Tribunal directed the AO to delete the penalty of Rs. 4,04,232 u/s 271(1)(c). The appeal was allowed, and the order was pronounced on 31st January 2011.
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