2018 (11) TMI 1488 - AT - Income Tax

Penalty levied u/s.271(1)(c) - excess expenses disallowed and suppression of receipts - bonafide mistake in accounting the total contract receipts - Held that - There is only meager amount of ₹ 5,74,774/- due to non reconciliation of TDS certificate with the PLA. This shows that the intention of the assessee was not to conceal anything but the mistake crept due to unintentional and erroneous consideration of contract receipts. In the written submissions the assessee has placed reliance on the decision of ITAT Rajkot in the case of Ravjibhai Premjibhai Motisariya 2014 (3) TMI 1136 - ITAT RAJKOT wherein such clerical mistake in the accounting has been held to be bonafide for which penalty u/s.271(1)(c) is not leviable. In the case in hand, we find that there appeared to be bonafide mistake in accounting the total contract receipts, therefore, this appears to be a bonafide mistake - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under section 271(1)(c) for assessment year 2005-06 due to disallowance of expenses and suppression of receipts.

Analysis:
1. The appeal contested the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, concerning the disallowed amount of ?5,74,774. The CIT(A) confirmed the penalty, leading to the appeal before ITAT Rajkot.
2. The assessment order disallowed expenses and receipts, resulting in a penalty on the alleged concealed income. The CIT(A) upheld the penalty on suppressed receipts but deleted it for disallowed expenses, citing the Reliance Petro Products Ltd. case.
3. The appellant argued that the discrepancy in receipts was a mere 0.5% and not intentional, citing judicial precedents on bonafide mistakes and lack of tax evasion intent.
4. After considering submissions, ITAT Rajkot found the discrepancy to be a clerical error, akin to a bonafide mistake, as seen in a similar case. Relying on precedent, the penalty on the suppressed receipts was deleted.
5. Additionally, an argument on the notice's vagueness under section 274 r.w.s 271(1)(c) was raised. However, as the appeal was allowed on merit, this legal ground was not admitted or decided upon, hence dismissed.
6. Ultimately, the appeal of the assessee was allowed, and the penalty under section 271(1)(c) was set aside based on the unintentional nature of the discrepancy in receipts.

This detailed analysis of the judgment provides a comprehensive understanding of the issues, arguments, and the tribunal's decision regarding the penalty under section 271(1)(c) for the assessment year 2005-06.