2023 (7) TMI 510 - HC - Income Tax

Penalty u/s 271(1)(c) - wrongful claim of lower LTCG - Disallowance u/s 94(7) - Dividend Striping - proof of bonafied mistake - ITAT deleted the penalty - HELD THAT - Tribunal noted that assessee herein had voluntarily filed the revised return duly disclosing the disallowance of the dividend in terms of Section 94(7) and revised its returned income. It is also admitted that the assessee has upon receipt of the assessment order issued by the AO deposited the enhanced amount of tax and had not challenged the assessment order. He at the first instance, admitted its mistake in computation and filed a revised return. Tribunal noted that an error had occurred due to the wrong posting of the entry by the book-keeping staff of assessee with respect to the relevant dividend entry income to a wrong date. Since the assessee had voluminous transactions, it committed an error while posting the relevant dividend entry, which was covered by one voucher since it was received on the same security. Tribunal has observed that it was a reasonable human error which could have been committed on the part of assessee on the same security, dividends were received at two distinct dates, however, the error crept in since, the book-keeping staff posted both the entries of the dividend to the same date. The Tribunal has accepted that upon a perusal of the record that such an error was possible and therefore has accepted the submission of assessee that this was a bonafide error and there was no intention on its part to evade tax. Thus the view taken by the Tribunal is reasonable. It is a view taken after perusing the records in detail. The Tribunal, after appreciating the evidence has found that the assessee has proven that it was a bonafide mistake and no substantial question of law would arise.

Summary

Issues involved:
The issues involved in the judgment are condonation of delay in filing an appeal under Section 5 of the Limitation Act, 1963 and the imposition of a penalty under Section 271(1)(c) of the Income Tax Act, 1961.

Condonation of Delay:
An application was filed for condonation of a 6-day delay in filing the appeal, which was granted by the court.

Penalty Imposition under Section 271(1)(c) of the Income Tax Act:
The Respondent filed a return of income for Assessment Year 2015-16, disclosing a loss from trading in derivatives. During assessment proceedings, discrepancies were found in the disclosed income, leading to a penalty being imposed under Section 271(1)(c) for furnishing inaccurate particulars of income. The Respondent revised the income computation, paid the tax demanded, and the assessment was completed. The penalty was challenged through appeals, and the Tribunal ultimately deleted the penalty, finding the error to be a bonafide mistake. The Appellant challenged this decision, arguing that the penalty was justified. The court upheld the Tribunal's decision, stating that the error was inadvertent and bonafide, dismissing the appeal.

Separate Judgment:
No separate judgment was delivered by the judges in this case.