2012 (4) TMI 113 - AT - Income Tax

Clerical mistake in filing return - return declaring nil income filed by the assesse - providing education and training for professionals in insurance and finance sector - service of a notice u/s 143(2)for scrutiny - A.O. noticed in the Tax Audit Report in Form 3CD that the prior period expenses totaling to Rs. 36,14,178/- were debited by the assessee under the different heads in the profit and loss account for the period ended 31.03.2006 - Show cause was issued as why the assessee did not add back aforesaid prior period expenses in the computation of income - the assessee submitted that the return filed originally contained some clerical mistakes and revised the computation of income, adding back the aforesaid amount of Rs. 36.14 lacs besides disallowing an amount of Rs. 2,17,344/- u/s 40(a) of the Act and claiming higher depreciation -The AO while accepting the revised computation of income added another amount of Rs. 7,000/- towards charity and donation and assessed loss - the AO initiated the penalty proceedings u/s 271(1)(c) of the Act in response to a show cause notice - After considering the reply to SCN, the AO levied penalty @100% of the tax evaded on the income as a result of aforesaid disallowances of Rs. 36,14,178/- and Rs. 2,17,344/- on the ground that the assessee furnished inaccurate particulars of income - Held that - mere erroneous claim in the absence of any concealment or furnishing of inaccurate particulars, is no ground for levying penalty, especially when there is nothing on record to show that any material particulars were concealed or furnished inaccurate - appeal of revenue dismissed

Issues Involved:
1. Deletion of penalty imposed under section 271(1)(c) of the Income-tax Act, 1961.
2. Assessment of clerical mistakes in the original return and subsequent revision.
3. Evaluation of the explanation provided by the assessee for the mistakes.
4. Determination of whether the assessee furnished inaccurate particulars of income or concealed income.

Issue-wise Detailed Analysis:

1. Deletion of Penalty Imposed under Section 271(1)(c) of the Income-tax Act, 1961:
The primary issue was whether the learned CIT(A) erred in deleting the penalty of Rs. 12,96,013/- imposed under section 271(1)(c) of the Income-tax Act, 1961. The penalty was levied by the Assessing Officer (AO) on the grounds that the assessee furnished inaccurate particulars of income by not adding back prior period expenses and other disallowances in the original return. The CIT(A) cancelled the penalty, concluding that the errors were clerical and not intentional, and the assessee had revised the computation of income upon realizing the mistakes.

2. Assessment of Clerical Mistakes in the Original Return and Subsequent Revision:
The assessee, engaged in providing education and training for professionals in the insurance and finance sector, initially filed a return declaring nil income. During scrutiny, the AO identified prior period expenses totaling Rs. 36,14,178/- that were not added back in the computation of income. Upon being show-caused, the assessee admitted to clerical mistakes and revised the computation, adding back the prior period expenses and other disallowances. The AO accepted the revised computation but initiated penalty proceedings for furnishing inaccurate particulars of income.

3. Evaluation of the Explanation Provided by the Assessee for the Mistakes:
The CIT(A) accepted the explanation provided by the assessee, noting that the mistakes were due to the confusion arising from the first year of online filing of returns. The CIT(A) highlighted that the assessee did not correctly claim depreciation, which further indicated that the mistakes were not intentional. The assessee had disclosed all material facts and revised the computation of income proactively. The CIT(A) relied on the Supreme Court's decision in Reliance Petroproducts (P) Ltd., which stated that mere technical mistakes in computation do not justify penalty under section 271(1)(c).

4. Determination of Whether the Assessee Furnished Inaccurate Particulars of Income or Concealed Income:
The Tribunal examined whether the assessee's actions amounted to furnishing inaccurate particulars of income or concealing income. It was noted that the terms "conceal" and "inaccurate particulars" were not defined in the Act but implied hiding or erroneous statements. The Tribunal emphasized that penalty proceedings are distinct from assessment proceedings, and the criteria for imposing penalty are different. The Tribunal found that the assessee's explanation was bona fide, and all material facts were disclosed. There was no evidence that the explanation was false or that the assessee had a deliberate intention to conceal income.

Conclusion:
The Tribunal upheld the CIT(A)'s decision to cancel the penalty, concluding that the mere erroneous claim without concealment or furnishing of inaccurate particulars does not justify penalty. The Tribunal found no deliberate intention or material concealment by the assessee. Consequently, the appeal by the Revenue was dismissed.

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