2021 (1) TMI 608 - AT - Income Tax

Penalty u/s. 271(1)(c) - difference in the actual service tax paid and that claimed at the assessee's behest - HELD THAT - Difference appears to have arisen on account of assessee's auditor's certificate issued inadvertently. Hon'ble apex court decision in Price Waterhouse Coopers Pvt. Ltd. 2012 (9) TMI 775 - SUPREME COURT holds in such a case of an inadvertent mistake in raising a claim is neither concealment nor that of filing of inaccurate particulars of income. Their lordships yet another decision in CIT Vs. Reliance Petroproducts P. Ltd., 2010 (3) TMI 80 - SUPREME COURT also settled the law much earlier that - quantum and penalty are distinct proceedings wherein each and every disallowance/addition made in case of the former and does not automatically attract the latter penal provision. Thus both the learned lower authorities have erred in penalising assessee u/s. 271(1)(c) in this case of the assessee's auditor's inadvertent mistake in raising higher service tax claim. This penalty is directed to be deleted therefore. - Decided in favour of assessee.

Summary

Issues:
Penalty under Section 271(1)(c) of the Income Tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The appeal before the Appellate Tribunal ITAT Hyderabad concerned the penalty of ?5,17,522 imposed under Section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2015-16. The Assessing Officer had imposed the penalty based on the difference between the service tax claimed in the profit and loss account and the actual service tax paid. The appellant contended that the discrepancy was due to an inadvertent mistake made by the auditor, which was supported by a certificate issued by the auditor. The appellant argued that the mistake was not intentional and was rectified during the assessment proceedings. However, the Assessing Officer found the explanation unsatisfactory and levied the penalty. The appellant further claimed that the mistake occurred due to oversight and was not intentional. The Tribunal considered the appellant's submissions and held that the penalty was unjustified in a case where the mistake was inadvertent and not deliberate. Citing legal precedents, the Tribunal emphasized that inadvertent errors do not amount to concealment or furnishing of inaccurate particulars of income. Therefore, the penalty under Section 271(1)(c) was deemed to be deleted, and the appellant's appeal was allowed.

In conclusion, the Tribunal found that the penalty imposed under Section 271(1)(c) for furnishing inaccurate particulars of income was unwarranted in this case of inadvertent error by the auditor. The Tribunal relied on legal precedents to establish that inadvertent mistakes do not attract penal provisions. Consequently, the penalty was deleted, and the appellant's appeal was allowed.