2015 (10) TMI 1071 - AT - Income Tax

Penalty u/s 271(1)( c) - mistake on the part of the company have claimed losses in the assessment year 2008-09 and surrender the wrong claim of carried forward of losses - assessee filed a revised computation withdrawing the claim of brought forward losses before completion of original assessment proceedings - Held that - Undisputedly, the assessee had not claimed brought forward losses in the previous assessment year viz. AY 2006-07 and 2007-08 and also in the subsequent years viz. 2009-10 and 2010-11. Accounts Head of the assessee company was in bad state of health, who returned from sickness on the last date of filing of return i.e. 30.09.2008 and return was filed on the same date at 11.30 p.m. in a hurry. Due to this unavoidable circumstance, the inadvertent mistake in claiming the brought forward losses occurred which was subsequently rectified by filing the revised computation of income before the completion of assessment. We may see tax audit report u/s 44AB for the year under consideration wherein brought forward losses or unabsorbed depreciation is shown as nil. The DR has not disputed this point that the assessee filed a revised return withdrawing the claim of brought forward losses before completion of original assessment proceedings. In this situation, the assessee could not be held to be guilty of furnishing of inaccurate particulars of income for levying penalty u/s 271(1) (c). Respectfully following the decision of in the case of Price Warehouse Coopers (P) Ltd. (2012 (9) TMI 775 - SUPREME COURT) we also observe that the assessee made claim for brought forward losses in the original return but when the mistake came to the notice of assessee, the assessee came forward to file a revised return and withdrawing the claim of brought forward losses. Form 3CD of tax audit report has also shown that the brought forward losses and unabsorbed depreciation was shown as nil in Annexure 9 and assessee did not make the same claim either in previous years or in subsequent assessment years. In this situation, we are unable to see any malafide or any deliberate act on the part of the assessee and without any hesitation, we hold that the assessee cannot be held guilty of furnishing of inaccurate particulars of its income, specially when the assessee filed a revised return immediately after noticing the mistake. - Decided in favour of assessee.

Summary

Issues:
Penalty imposed under section 271(1)(c) for inaccurate particulars of income.

Analysis:
1. The appeal was filed against the penalty order dated 27.06.2011 imposed under section 271(1)(c) by the Assessing Officer, which was affirmed by the Commissioner of Income Tax(A). The main ground of appeal was that the penalty was imposed ignoring the fact that there was no concealment or furnishing of inaccurate particulars of income by the assessee.

2. The facts revealed that the original assessment was completed under section 143(3) of the Income Tax Act, 1961, where the assessee had claimed losses but later submitted a revised computation stating a mistake in the claim of carried forward losses. The Assessing Officer initiated penalty proceedings based on this discrepancy.

3. The assessee contended that the mistake was inadvertent, attributed to the sickness of the Accounts Head, who rectified the error by filing a revised return before the completion of assessment. The tax audit report also indicated that the carry forward of losses was shown as nil, supporting the assessee's claim.

4. The assessee argued that there was no deliberate attempt to furnish inaccurate particulars of income, citing relevant case laws to support their position. The Departmental Representative, however, maintained that the incorrect claim of losses amounted to furnishing inaccurate particulars, justifying the penalty.

5. The Tribunal observed that the assessee had rectified the mistake promptly by filing a revised return, and there was no evidence of malafide intent or deliberate misrepresentation. Referring to a Supreme Court decision, the Tribunal held that in such cases of inadvertent errors promptly rectified, penalties under section 271(1)(c) should not be imposed.

6. Consequently, the Tribunal allowed the appeal, concluding that the penalty imposed under section 271(1)(c) was unjustified, and directed its deletion. The decision emphasized the importance of prompt rectification of inadvertent errors to avoid penal consequences.

This detailed analysis of the judgment highlights the key arguments, facts, and legal principles considered by the Tribunal in reaching its decision to delete the penalty imposed on the assessee.