2022 (8) TMI 1126 - AT - Income Tax

Penalty u/s 271(1)(c) - addition made on account of loss on sale of assets by treating the assessee guilty of having furnished inaccurate particulars of its income - HELD THAT - Submission made by the assessee in writing during the course of assessment proceedings itself as well as the further details already furnished by the assessee along with its return of income giving full and true details of the loss as well as its capital nature, we find merit in the contention for the assessee that the mistake in not adding back the loss on sale of fixed assets in computation of income was a bona fide mistake inadvertently committed by the assessee. In the case of Price Waterhouse Coopers Pvt Ltd 2012 (9) TMI 775 - SUPREME COURT relied upon by the learned Counsel for the assessee, the Hon ble Supreme Court held that even if the assessee was a reputed firm and had great expertise available with it, it was possible that it could make a silly mistake. In this regard, the Hon ble Supreme Court took note of the fact that the Tax Audit Report filed by the assessee along with return of income unequivocally stated that the provision for payment was not allowable under Section 40A(7) of the Act and held that the contents of the Tax Audit Report suggested that there was no question of the assessee concealing its income or furnishing any inaccurate particulars of its income. Hon ble Apex Court held that it was through a bona fide and inadvertent mistake, the assessee while submitting its return, failed to add the provision for gratuity to its total income. It was held that the imposition of penalty on the assessee, therefore, was not justifiable. The decision of the Hon ble Supreme Court in the case of Price Waterhouse Coopers Pvt Ltd (supra) is squarely applicable in the facts of the present case as discussed above and respectfully following the same, we cancel the penalty imposed by the Assessing Officer under Section 271(1)(c) - Decided in favour of assessee allowed.

Summary

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

Detailed Analysis:

Issue 1: Penalty Imposed by Assessing Officer
The Assessing Officer imposed a penalty of Rs.1,08,853/- on the assessee for not adding back the loss on sale of assets in the computation of income, treating it as furnishing inaccurate particulars of income under Section 271(1)(c) of the Act. The assessee contended that it was an inadvertent mistake and not willful suppression of facts, citing the Tax Audit Report and the nature of the loss as capital expenditure.

Issue 2: Appeal before CIT(A)
The assessee challenged the penalty before the CIT(A), arguing that the penalty was not sustainable as there was no intention to evade tax, and the mistake was genuine without any willful suppression or misrepresentation of facts. The CIT(A) upheld the penalty, stating that the assessee furnished inaccurate particulars of income, and intent to evade tax was not required to be proven.

Issue 3: Tribunal's Decision
The assessee appealed to the Tribunal, reiterating that the mistake was inadvertent and citing the Supreme Court's decision in a similar case. The Departmental Representative argued that the mistake was detected by the Assessing Officer, indicating inaccurate particulars of income. The Tribunal examined the details provided by the assessee, including the profit and loss account and Audit Report, concluding that the mistake was bona fide. Relying on the Supreme Court's precedent, the Tribunal canceled the penalty, emphasizing that the assessee did not conceal income or furnish inaccurate particulars.

In summary, the Tribunal allowed the assessee's appeal, canceling the penalty imposed under Section 271(1)(c) of the Act. The decision was based on the finding that the mistake in not adding back the loss on sale of assets was inadvertent and not indicative of willful suppression of facts or intent to evade tax, as supported by the details provided by the assessee and the precedent set by the Supreme Court in similar cases.