2018 (11) TMI 944 - AT - Income Tax

Penalty levied u/s. 271(l)(c) - additions towards donation paid and STT paid - Held that - As admitted fact that the assessee has filed revised statement of total income rectifying the said mistakes before completion of assessment proceedings. The reason given by the assessee for not disallowing those two items in the statement of total income is that there is an inadvertent error while filing return of income, which resulted in omission of those two items in the statement of total income. The said mistakes is only a human error which cannot be considered as deliberate attempt made to evade payment of taxes. When we examine the claim of the assessee in the light of the decision of Hon ble Apex Court in the case of Price Waterhouse Coopers Pvt Ltd vs CIT, Kolkatta 2012 (9) TMI 775 - SUPREME COURT we find that the facts of the assessee s case are identical to the facts of the case while deleting penalty levied u/s 271(1)(c). In the said case, although the tax auditor quantified the disallowance of certain amount, the assessee failed to add back in the statement of total income. Under those facts, this cannot be considered as wilful attempt made to evade payment of taxes and at best, it could be termed as a human error which we are all prone to make. In this case, on perusal of facts, we find that although the assessee has disclosed all facts in respect of those two items of expenses, but failed to add back in the statement of total income, while filing return of income. The said mistake has been rectified immediately after noticing during the course of assessment proceedings by filing revised statement of total income. Under these facts and circumstances, the AO was incorrect in coming to the conclusion that the assessee has furnished inaccurate particulars of income in respect of donation paid & STT which warrants levy of penalty u/s 271(1)(c). - Decided against revenue.

Summary

Issues:
- Penalty under section 271(1)(c) for furnishing inaccurate particulars of income regarding disallowance of donation paid and security transaction tax (STT) in the computation of total income for AY 2012-13.

Analysis:
1. The revenue filed an appeal against the order of the CIT(A) regarding the deletion of penalty under section 271(1)(c) for inaccuracies in the computation of total income. The AO had initiated penalty proceedings due to the disallowance of donation paid and STT in the return filed by the assessee. The AO held that the additions made in the quantum assessment were final and not due to inadvertent errors. The penalty was imposed at 100% of the tax sought to be evaded.

2. The assessee contended that the inaccuracies were rectified by filing a revised statement of total income immediately after noticing the errors. The primary facts were disclosed in the financial statements, but due to inadvertent human error, the amounts were not added back in the total income statement. The CIT(A) relied on a Supreme Court decision to rule that such errors did not warrant penalty under section 271(1)(c) as they were not deliberate attempts to evade tax.

3. The Ld.CIT(A) emphasized that the assessee's case was similar to the precedent where the Supreme Court held that inadvertent errors in adding certain expenses to total income did not constitute deliberate concealment or inaccuracies. The penalty was cancelled based on this reasoning, as the primary facts were disclosed, and the errors were rectified promptly during the assessment proceedings.

4. The revenue argued that the penalty should not have been deleted as the assessee willfully avoided disallowance of the expenses in the total income computation. However, the assessee maintained that the errors were unintentional and rectified promptly, following the guidelines set by the Supreme Court in similar cases.

5. After hearing both parties, it was concluded that the assessee had disclosed all primary facts, rectified the errors promptly, and the inaccuracies were due to inadvertent human errors. The decision of the Ld.CIT(A) to delete the penalty was upheld based on the precedent set by the Supreme Court and the specific circumstances of the case.

6. In conclusion, the appeal filed by the revenue was dismissed, and the penalty under section 271(1)(c) was deleted based on the findings that the errors in the computation of total income were inadvertent and promptly rectified during the assessment proceedings.