2015 (9) TMI 1293 - AT - Income Tax

Levy of penalty under section 271(1)(c) - appellant tendered an explanation saying that the additions were as a result of bona fide mistaken occurred at the time of preparation of return of income - Held that - We are of the considered opinion that the appellant had no intention of concealing the particular of the claim made, having regard to the fact that full disclosure was made of the items written off in the schedule XI financial statement, and the appellant on its own before the detection of the same by the Assessing Officer had offered the same to tax. This goes to prove that mistake is bona fide and therefore no penalty can be levied under the provisions of Section 271(1)(c) of the Act. In this regard, we also place reliance on the decision of Hon ble Supreme Court in the case of Price Water House Coopers (P.) Ltd., 2012 (9) TMI 775 - SUPREME COURT Thus we hold that no penalty is leviable in the facts and circumstances of the case under Section 271(1)(c) of the Act. Hence, the appeal filed by the assessee is allowed in full. - Decided in favour of assessee.

Summary

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961 for assessment year 2003-04.

Analysis:
The appellant contested the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2003-04. The primary contention was that the deduction claimed was a result of oversight and not an attempt to evade tax liability. The appellant highlighted that certain amounts were inadvertently included in the deduction under Section 43B, leading to the penalty imposition. The appellant argued that the mistake was bona fide and was rectified upon discovery. The appellant cited relevant case laws to support their argument, emphasizing full disclosure of the items in the financial statements. The Assessing Officer, however, upheld the penalty relying on a specific court decision.

The Tribunal considered the submissions and evidence presented by both parties. It noted that the appellant had voluntarily rectified the error upon identification, demonstrating good faith. The Tribunal referred to the decision of the Hon'ble Supreme Court in a similar case to establish the principle that inadvertent errors, even by reputable entities, do not necessarily imply intent to conceal income or provide inaccurate particulars. The Tribunal concluded that the appellant's mistake was genuine and unintentional, absolving them from the penalty under Section 271(1)(c) of the Act. The Tribunal's decision was based on the principle of bona fide error and the absence of intent to evade tax obligations.

Therefore, the Tribunal allowed the appeal filed by the assessee in full, ruling that no penalty was justifiable under the circumstances. The judgment emphasized the importance of good faith and rectification of errors, aligning with the precedent set by the Hon'ble Supreme Court in similar cases. The decision was pronounced on 4th September 2015, in favor of the appellant.