2016 (9) TMI 1367 - AT - Income Tax

Penalty levied u/s 271(1)(c) - claim made under section 80HHB - bonafide and inadvertent error - Held that - The assessee has furnished all the details of expenditure as well as income in its return for assessment. There was no finding of the assessing authority that any of the details supplied by the assessee in its return were found to be incorrect or erroneous or false. It is an admitted fact that only on the inadvertent mistake of the Chartered Accountant, the assessee has made a claim under section 80HHB of the Act. Apart from the assessee, even the Assessing Officer who framed the original assessment order made a mistake in overlooking the contents of the tax audit report and the tax audit report suggest that there is no question of the assessee concealing its income. There is also no question of the assessee furnishing any inaccurate particulars. All that happened in the present case is that through a bonafide and inadvertent error, the C.A. failed to note the ceiling in respect of amount credited by the assessee to foreign project reserve account while computing the deduction under section 80HHB of the Act, that by itself would not, in our considered opinion, attract the penalty under section 271(1)(c) of the Act. Our above view has been duly fortified by the Hon ble Supreme Court in the case of Price Waterhouse Coopers Private Ltd vs. CIT (2012 (9) TMI 775 - SUPREME COURT ) - Decided in favour of assessee.

Summary

Issues:
1. Deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:
1. The appeal was filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals) 6, Chennai, regarding the deletion of penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2002-03. The Revenue contended that the ld. CIT(A) erred in deleting the penalty.
2. The assessee, engaged in the business of design, fabrication, and supply of cement equipment, filed its return for the assessment year 2002-03 declaring total income. The assessment was revised multiple times, and penalty under section 271(1)(c) was imposed in relation to the claim of deduction under section 80HHB of the Act.
3. The assessee appealed the penalty order before the ld. CIT(A), presenting detailed submissions supported by case law. The ld. CIT(A) considered the submissions and judicial pronouncements and deleted the penalty.
4. The Revenue appealed before the Tribunal, arguing that the deletion of the penalty was unwarranted due to inaccurate particulars furnished by the assessee. The assessee's counsel reiterated that there was no concealment or furnishing of inaccurate particulars.
5. The Tribunal analyzed the case, noting that the Department failed to properly verify the particulars of the assessee during the original assessment. It was highlighted that the Assessing Officer did not provide incriminating evidence for initiating reassessment or imposing the penalty. The Tribunal found that the penalty was not justified as there was no deliberate concealment or furnishing of inaccurate particulars by the assessee.
6. The Tribunal emphasized that the inadvertent error made by the Chartered Accountant in computing the deduction under section 80HHB did not warrant the penalty under section 271(1)(c) of the Act. Citing relevant case law, the Tribunal concluded that the assessee's actions did not amount to furnishing inaccurate particulars. The Tribunal upheld the ld. CIT(A)'s decision to delete the penalty.
7. Consequently, the Tribunal dismissed the Revenue's appeal, affirming the deletion of the penalty under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2002-03.