2018 (6) TMI 1043 - AT - Income Tax

Penalty u/s 271(1)(c) - inadvertent mistake by accountant as long term capital loss has been reduced and short term capital loss has been inflated - rectification made in revision of return - bonafide inadvertent error - Held that - Assessee admitted the fact of committing the said mistake by his accountant and immediately rectified the same and which was accepted by the AO u/s. 147 re-assessment proceedings - in the case of Price Waterhouse Coopers Pvt. Ltd Vs. CIT 2012 (9) TMI 775 - SUPREME COURT held that an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars and that can be described as human error - thus it was human error, but does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income - CIT-A was not justified in confirming the penalty imposed by the AO u/s 271(1)(c) and is cancelled - Decided in favor of assessee.

Summary

Issues:
1. Justification of confirmed penalty under section 271(1)(c) of the Act by CIT-A.

Detailed Analysis:
The case involved an appeal by the Assessee against the order of the CIT-A confirming a penalty imposed under section 271(1)(c) of the Act. The main issue was whether the CIT-A was justified in confirming the penalty in the given circumstances. The Assessee, an individual engaged in a partnership firm, had disclosed incorrect capital gains in the original return, which were later rectified in a revised return. The Assessee claimed that the errors were due to inadvertent mistakes by the accountant, which were rectified during re-assessment proceedings under section 147 of the Act.

The Assessee contended that the mistakes were bona fide and not intended to conceal income or furnish inaccurate particulars, citing relevant case laws, including a judgment of the Hon'ble Supreme Court. The Assessee argued that the AO had accepted the original assessment, and the errors were detected during re-assessment, which were promptly rectified. The Assessee emphasized that the errors were human mistakes and not deliberate attempts to evade taxes.

The Tribunal analyzed the facts and circumstances of the case, comparing them to the precedent set by the Hon'ble Supreme Court in a similar matter. The Tribunal noted that the errors were rectified promptly upon detection, and the AO had accepted the rectification during re-assessment proceedings. Relying on the Supreme Court's decision and a Co-ordinate Bench ruling, the Tribunal concluded that the penalty under section 271(1)(c) was not justified in this case. The Tribunal found that the Assessee's actions were inadvertent and bona fide, without any intention to conceal income or provide inaccurate particulars.

Ultimately, the Tribunal allowed the Assessee's appeal, canceling the penalty imposed by the AO. The Tribunal's decision was based on the principle that the errors were genuine mistakes rectified in good faith, aligning with the legal precedent and the specific circumstances of the case.

In conclusion, the Tribunal's detailed analysis focused on the bona fide nature of the errors, the prompt rectification, and the lack of intent to evade taxes, leading to the cancellation of the penalty under section 271(1)(c) of the Act.