2024 (2) TMI 699 - AT - Income Tax

Penalty 271(1)(c) - additions on account of donation and charity, and on account of loss on sale of assets, which were debited to the profit and loss account, however, the same were not been added by the assessee in the computation of income - assessee filed a revised computation of income including the aforesaid amount towards donation and charity HELD THAT - It is not a case wherein the assessee has disputed the discrepancies pointed out by the AO during the scrutiny proceedings. Further, we find that once the aforesaid discrepancies were pointed out the assessee accepted its mistake and filed the revised computation of income, and paid the tax difference. It is undisputed that the assessee has not further challenged the aforesaid additions made by the AO in the present case. Further, the fact that the donation given was stated in the Tax Audit Report and the deduction u/s 80G was also computed by the tax auditor, however even then the assessee failed to claim a deduction u/s 80G of the Act supports the claim of the assessee that the mistakes were sheer inadvertent human error. We find that the plea of the assessee is supported by the decision of Price Waterhouse Coopers (P.) Ltd. 2012 (9) TMI 775 - SUPREME COURT . Therefore, assessee made bona fide mistakes in the computation of its total income while filing its original return of income, which were corrected by the assessee by filing the revised computation during the assessment proceedings. Thus it is is not a fit case for the levy of penalty u/s 271(1) (c) - Decided in favour of assessee.

Summary

Issues involved:
The judgment involves the challenge against the levy of penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2011-12.

Summary:

Issue 1: Challenge against penalty under section 271(1)(c) of the Act
The appellant challenged the penalty of Rs. 17,81,066 imposed under section 271(1)(c) of the Income Tax Act, arguing that the National Faceless Appeal Centre erred in upholding the penalty. The only grievance of the assessee was against this penalty.

Details:
The appellant, a pharmaceutical products company, filed its return of income for the relevant year but failed to include certain amounts in the computation of income. The Assessing Officer made additions to the total income, including disallowances for donation and charity, loss on sale of assets, and sales promotion expenses. Subsequently, a penalty notice was issued, and a penalty of Rs. 17,81,066 was levied based on these additions. The appellant contended that the discrepancies were inadvertent human errors and rectified the computation during assessment proceedings, paying the differential tax amount. The Tribunal found that the mistakes were bona fide and accepted the appellant's explanation, citing the decision in Price Waterhouse Coopers (P.) Ltd. v/s CIT. Consequently, the penalty was deemed unjustified, and the AO was directed to delete it.

Outcome:
The Tribunal allowed the appeal, directing the deletion of the penalty under section 271(1)(c) of the Act. The additional ground raised by the assessee was kept open for future consideration.