2018 (7) TMI 832 - AT - Income Tax

Penalty u/s. 271(1)(c) - set off of losses and depreciation - Held that - It seems the mistake has happened in earlier year and assessee bonafidely claimed during the year even though advance tax to a larger amount was paid which was claimed as refund. Since the mistake in my opinion is bonafide and further the set off of losses and depreciation can also be modified on the basis of record u/s. 154 the facts does not lead to levy of penalty u/s. 271(1)(c) and the same does not come within the concept of concealment of income or furnishing of inaccurate particulars during the year. For the mistake committed in AY. 2011-12 which AO has not modified in that year no penalty can be levied during this year for the reason that the computation of income relied on claim made in AY. 2011-12. The penalty laid u/s. 271(1)(c) of the Act is therefore deleted. - Decided in favour of assessee.

Summary

Issues:
1. Penalty u/s. 271(1)(c) of the Income Tax Act for false claim of brought forward loss and unabsorbed depreciation.

Analysis:
The appellant filed a return of income for AY 2012-13, admitting a total income after claiming set off of business loss and depreciation for AY 2010-11. During scrutiny, it was found that there was no loss to be carried forward for AY 2010-11. The AO initiated penalty proceedings u/s. 271(1)(c) for furnishing inaccurate particulars. The appellant claimed the mistake was due to clerical error and revised the computation after AO's verification. The AO imposed a penalty, stating the appellant willfully misled the assessment process. The CIT(A) upheld the penalty, emphasizing that the false claim cannot be justified as a clerical error. The appellant argued that the mistake occurred in AY 2011-12 and was inadvertently carried forward. The ITAT found the mistake to be bonafide, as the claim was based on the previous year's computation. The penalty was deleted, concluding that there was no concealment or furnishing of inaccurate particulars during the year, and the mistake could be rectified under section 154.

Significant Phrases:
- Penalty u/s. 271(1)(c) of the Act
- False claim of brought forward loss and unabsorbed depreciation
- Clerical error
- Furnishing inaccurate particulars
- Bonafide mistake
- Concealment of income
- Rectification under section 154