2013 (11) TMI 973 - HC - Income Tax

Penalty u/s 271(1)(c) Set off of business loss - Held that - Due to bonafide mistake of the Tax Consultant of the assessee, the claim of set off of carry forward business loss was made against the income from other source during the year under consideration, which was not admissible - Immediately when it was brought to the notice of the assessee, a revised working of the total income was furnished - In absence of any supporting Affidavit of the Chartered Accountant that it was his bonafide mistake, both the learned CIT(A) as well as ITAT have not considered the aforesaid submission - The assessee has placed on record before the authorities Affidavit of the Chartered Accountant submitting that it was his bonafide mistake The issue was restored for fresh decision.

Summary

Issues:
1. Disallowance of set off of carry forward business loss
2. Penalty under section 271(1)(c) of the Income Tax Act
3. Submission of supporting Affidavit of the Tax Consultant

Analysis:
1. The assessee filed a return of income for AY 2008-09, but the AO disallowed the set off of carry forward business loss of Rs.11,50,459. Penalty proceedings under section 271(1)(c) of the Income Tax Act were initiated due to the claim being made against income from other sources, which was not admissible. The AO imposed a penalty of Rs.3,91,041 for filing inaccurate particulars of income. The CIT(A) and the ITAT confirmed the penalty, citing lack of supporting evidence or Affidavit from the Tax Consultant to prove a genuine mistake. The appellant submitted an Affidavit from a Chartered Accountant stating it was a bonafide mistake, which was not presented before the ITAT initially.

2. The main contention was the absence of supporting evidence to substantiate the claim of a mistake by the Tax Consultant. The ITAT upheld the penalty due to the lack of an Affidavit from the Tax Consultant. However, the High Court considered the newly submitted Affidavit and the appellant's request to remit the matter to the ITAT for a fresh consideration. The Court acknowledged the bonafide mistake claim and the revised working of total income furnished promptly after the error was noticed.

3. The High Court allowed the appeal, quashed the ITAT's judgment, and remitted the matter back to the ITAT for a fresh consideration. The Court emphasized the importance of the newly submitted Affidavit from the Chartered Accountant, which was not before the ITAT initially. The Court clarified that it did not express any opinion on the merits of the case, leaving it to the ITAT to pass an appropriate order based on the Affidavit and other evidence presented by the appellant.