2019 (8) TMI 1633 - AT - Income Tax

Penalty u/s 271(1)(c) - Disallowance of loss on sale of fixed asset (motor car) and prior period expenses - HELD THAT - No dispute that assessee accepted both the additions / disallowances voluntarily during the course of assessment. It is further not in dispute that no further appeal is filed by the assessee against such additions. In reply to the show cause notice under section 274 rws 271(1)(c) the assessee has explained that there was no malafide intention to conceal the income or particulars of income, the addition has been accepted in full. Hon ble Supreme Court in the case of Price Water Coopers Pvt Ltd (PWC) 2012 (9) TMI 775 - SUPREME COURT held that when the assessee due to bonafide and inadvertent error, the assessee while submitting its return, failed to add the provision of gratuity to its total income, the assessee should have been careful but the absence of due care in a case such as present one did not mean that assessee was guilty of either furnishing inaccurate particulars or attempting to conceal the income. - Decided in favour of assessee.

Summary

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

Analysis:
The appeal was against the order of CIT(A)-47, Mumbai for AY 2012-13. The assessee contended that no penalty should be levied under section 271(l)(c) as full and correct particulars of income were furnished, and there was no intention to conceal income or provide inaccurate particulars. The AO disallowed the claimed loss on the sale of a fixed asset (motor car) and prior period expenses, initiating penalty proceedings. The AO imposed a penalty of ?78,100. The CIT(A) upheld the AO's action, leading to the appeal.

During the proceedings, the assessee explained that the debited amount on the sale of the fixed asset was due to an inadvertent mistake, and the assessee voluntarily offered it for assessment. The assessee also agreed to disallow the prior period expenses. The assessee contended that there was no deliberate action to conceal income. The assessee cited the Price Water Coopers Pvt Ltd case to support their argument.

The revenue supported the lower authorities' orders, stating that had the return not been scrutinized, the income would have escaped assessment. The Tribunal noted that the assessee voluntarily accepted the additions during assessment and explained in response to the show-cause notice that there was no mala fide intention. Citing the Price Water Coopers Pvt Ltd case, the Tribunal held that the absence of due care did not imply an attempt to conceal income or furnish inaccurate particulars.

Based on the facts and the Price Water Coopers Pvt Ltd case, the Tribunal concluded that no penalty was warranted in this case. The AO was directed to delete the entire penalty, and the appeal of the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing the inadvertent nature of the mistake and the absence of deliberate intent to conceal income. The decision was based on the Price Water Coopers Pvt Ltd case, where a similar inadvertent error did not lead to penalty imposition.