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2016 (3) TMI 1228 - AT - Income TaxPenalty levied u/s 271(1)(c) - liability u/s 43B disallowed - Held that - Assessing officer raised the query in the order sheet. It is clear that a photocopy of the Form 3CD annexed by the tax auditor to Form No. 3CA was produced before the lower authorities. It is noticed that at Sr. No.21 of this form the auditor has mentioned 16, 55, 846/- was a liability u/s 43B disallowed during the earlier years and paid during the previous years. Therefore person who made computation of income for filing income tax return of the assessee claimed that there are expenses for the assessment year 2006-07. This was an inadvertent mistake on the part of the tax auditor. During the course of assessment proceedings when it came to the notice of the assessee that similar deduction has already been allowed in the preceding assessment year and the mistake was brought to the notice of the Assessing officer. Thus considering the entire facts and circumstances of the present case we are of the opinion that in this case penalty u/s 271(1)(c) of the Act is not leviable. Accordingly we cancel the penalty regarding the addition - Decided in favour of assessee.
Issues Involved:
1. Infructuous appeal against penalty u/s 271(1)(c) for deletion of addition by the Assessing Officer. 2. Infructuous appeal against penalty u/s 271(1)(c) for deletion of addition by the Tribunal's direction. 3. Confirmation of penalty u/s 271(1)(c) for disallowance of bonus due to mistake in Form 3CD. Detailed Analysis: 1. Infructuous Appeal Against Penalty u/s 271(1)(c) for Deletion of Addition by the Assessing Officer: The assessee contended that the CIT(A) erred in declaring the appeal against the penalty u/s 271(1)(c) as infructuous despite the Assessing Officer deleting the addition. The Tribunal observed that the issue of disallowance of Rs. 6,95,000 on account of exchange difference was restored to the Assessing Officer by the Tribunal to determine the facts and decide afresh. Since the Assessing Officer already deleted this addition, there was no basis for levying the penalty u/s 271(1)(c). The Tribunal reiterated the well-settled law that if the additions on which the penalty was based are deleted, the penalty cannot survive. Consequently, the Tribunal canceled the penalty u/s 271(1)(c) on the disallowance of Rs. 6,95,000 and allowed ground No.1 of the appeal. 2. Infructuous Appeal Against Penalty u/s 271(1)(c) for Deletion of Addition by the Tribunal's Direction: The CIT(A) held that the appeal against the penalty u/s 271(1)(c) for the addition of Rs. 2,82,805 on account of capitalization of upfront fee and processing fee had become infructuous as the Tribunal directed the Assessing Officer to verify the issue afresh. The Tribunal noted that the CIT(A) did not decide whether the penalty was leviable on this addition. It emphasized the settled legal position that if the assessment order on which the penalty is based is set aside or canceled, the penalty cannot stand. Thus, the Tribunal modified the CIT(A)'s order and canceled the penalty on the amount of Rs. 2,82,805, allowing ground No.2 of the appeal. 3. Confirmation of Penalty u/s 271(1)(c) for Disallowance of Bonus Due to Mistake in Form 3CD: The assessee argued that the penalty u/s 271(1)(c) for the disallowance of Rs. 16,55,846 as bonus was due to an inadvertent mistake in Form 3CD. The Assessing Officer imposed the penalty for furnishing inaccurate particulars of income, which the CIT(A) upheld. The Tribunal noted that the assessee had voluntarily disclosed the mistake to the Assessing Officer before the assessment was finalized. The Tribunal referred to the Supreme Court's decision in Price Waterhouse Coopers Pvt. Ltd Vs. CIT, which held that a bona fide and inadvertent error does not amount to furnishing inaccurate particulars or concealing income. The Tribunal found that the assessee's error was similar and that the penalty was not justified. Therefore, the Tribunal canceled the penalty regarding the addition of Rs. 16,55,846. Conclusion: The Tribunal allowed the appeal, canceling the penalties u/s 271(1)(c) on all grounds, and pronounced the order in the open court on 16.03.2016.
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