2015 (4) TMI 706 - HC - Income Tax

Penalty for concealment of income / Furnishing any inaccurate particulars - Bonafide and inadvertent error - Assessee accepted the correct position and paid tax with interest - Held that - In Price Waterhouse Coopers Pvt. Ltd. 2012 (9) TMI 775 - SUPREME COURT , the Supreme Court deleted the penalty and has accepted that human errors do happen in spite of calibre, expertise and due care. Mistakes, when explained and shown to be bona fide, do not justify levy of penalty. On the question relating to addition of ₹ 5,56,254/-, the tribunal has observed that the assessee had received the said amount as dividend from a mutual fund. As per Section 94(7) of the Income Tax Act, 1961, the assessee was required to reduce the dividend amount from the cost price of the units of mutual fund. This again, the tribunal has held, that was a bona fide mistake which was corrected/rectified by filing a revised computation of income. Full details and particulars had been submitted by the assessee to the Assessing Officer. We do not see any reason to interfere. - Decided against the revenue.

Summary

Issues: Mistake in tax calculation leading to penalty, addition of dividend amount in income calculation

Issue 1: Mistake in tax calculation leading to penalty
The High Court upheld the Tribunal's finding that the assessee's mistake in tax calculation was a genuine error, not justifying the levy of penalty. Referring to Price Waterhouse Coopers Pvt. Ltd. Vs. Commissioner of Income Tax, the Court emphasized that human errors, even by experts, can occur. The Tribunal had accepted the assessee's explanation that the discrepancy in tax rates was inadvertent, leading to the assessee paying tax at a lower rate of 10% instead of the correct 30%. The Court noted that there was no dispute regarding the figures and transactions, with the assessee disclosing the first transaction as short-term capital gains and paying the applicable tax and interest. The Court concurred with the Tribunal's decision and dismissed the appeal based on the factual findings.

Issue 2: Addition of dividend amount in income calculation
Regarding the addition of a dividend amount of &8377; 5,56,254 in the income calculation, the Tribunal found that the assessee had received this amount from a mutual fund. As per Section 94(7) of the Income Tax Act, the assessee was required to deduct the dividend amount from the cost price of mutual fund units. The Tribunal held that the inclusion of this amount in the income was a bona fide mistake, promptly rectified by filing a revised computation of income. The assessee had provided full details to the Assessing Officer, and the Court saw no reason to interfere with the Tribunal's decision. Consequently, the appeal was dismissed based on the tribunal's factual findings and the corrective actions taken by the assessee in rectifying the mistake in the income calculation.