2010 (4) TMI 799 - AT - Income Tax

Penalty u/s 271(1)(c) - tax payable under regular computation as per return of income was nil and under section 115JB the tax payable was Rs. 83,15,934 - The memo of income is prepared through Excel software and the assessee claims that the wrong reporting took place because of error in Excel formula - Excel software has been correctly programmed to do the subtraction operation and has arrived at the correct figure Rs. 8,51,66,606 but with the brackets which is impossible to happen in Excel sheet unless the brackets are deliberately included - Held that it is not merely a clerical error as claimed by the assessee but deliberate furnishing of inaccurate particulars of income and thereby attracting penal provisions under section 271(1)(c) If the tax payable under section 115JB is nil as mentioned in the report then how in the annexure to the same report can the book profit be Rs. 10,81,45,235 and the income of the company under the Income-tax Act the loss of Rs. 8,62,60,370 - in this case, the explanation offered by the assessee is itself proved to be false because the assessee has not taken any further step in this regard and has simply stated that it may be a computer mistake - this is a clear cut case of furnishing of inaccurate particulars of income on which penalty under section 271(1)(c) of the Act is exigible - Decided against the assessee

Summary

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

Analysis:
1. The case involved an appeal by the Revenue against the order of the learned Commissioner of Income-tax (Appeals) regarding a penalty under section 271(1)(c) for the assessment year 2004-05. The assessee had initially declared a loss of Rs. 8,62,60,370 but later it was found that this loss was actually a profit figure. The Assessing Officer initiated penalty proceedings as a tax of Rs. 2,25,29,973 had escaped due to inaccurate particulars of income furnished by the assessee. The Assessing Officer concluded that the error was deliberate, not inadvertent, based on discrepancies in the memo of income prepared through Excel software and the chartered accountant's report. The penalty of Rs. 4 crores was levied under section 271(1)(c) by the Assessing Officer, which was later deleted by the Commissioner of Income-tax (Appeals) citing inadvertent error. The Revenue appealed against this deletion of penalty.

2. The Tribunal carefully examined the facts and held that the particulars filed by the assessee were inaccurate and not rectified even after notice. The case fell under the category of furnishing inaccurate particulars of income. The Tribunal referred to Explanation 1 to section 271(1)(c) which states that if the explanation offered by the assessee is false and not substantiated, the amount added or disallowed shall be deemed as concealed income. The Tribunal found the explanation provided by the assessee as false, as no steps were taken to rectify the error. The Tribunal distinguished previous cases cited by the assessee's representative, emphasizing that in this case, the error was not a mere calculation mistake but deliberate furnishing of inaccurate particulars. Therefore, the Tribunal reversed the decision of the Commissioner of Income-tax (Appeals) and confirmed the penalty order dated 28-6-2007, amounting to Rs. 4 crores.

3. The Tribunal emphasized that the assessee's claim of a computer mistake was not substantiated and that discrepancies in the book profit audit report and other stages indicated deliberate inaccurate reporting. The Tribunal noted that even if an assessee admits to furnishing inaccurate particulars but fails to substantiate explanations, penalties must be imposed. The Tribunal referred to relevant legal precedents to support its decision, ultimately allowing the Revenue's appeal and confirming the penalty under section 271(1)(c) for furnishing inaccurate particulars of income.

This comprehensive analysis highlights the key legal aspects and reasoning behind the Tribunal's decision on the penalty for furnishing inaccurate particulars of income in the mentioned case.