2019 (1) TMI 149 - AT - Income Tax

Penalty u/s 271(1)(c) - wrong Claim of exemption u/s. 10B - reopening of assessment - bonafide mistake - Held that - It is not disputed that the deduction was withdrawn by an amendment in law w.e.f. 1.4.2008. Under these facts, more particularly that assessee has been allowed deduction in earlier years, we find force into the contention of the assessee that due to bonafide mistake, claim was made. Therefore, respectfully following the judgement of the Hon ble apex court rendered in the case of Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012 (9) TMI 775 - SUPREME COURT), we direct the A.O. to delete this penalty. - decided in favour of assessee.

Summary

Issues:
1. Confirmation of penalty u/s 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal before the Appellate Tribunal ITAT Indore was related to the assessment year 2009-10 against the order of the CIT(A)-II, Indore confirming the penalty u/s 271(1)(c) of the Act. The case involved the disallowance of a deduction u/s 10B of the Act and the initiation of penalty proceedings. The Appellate Tribunal considered the submissions made by the assessee, who argued that the mistake in claiming the deduction was bonafide due to a recent amendment in the law withdrawing the deduction u/s 10B. The assessee relied on legal judgments to support their case, emphasizing the bonafide nature of the error. The authorities below had not accepted the explanation provided by the assessee, stating that the error was rectified only after being pointed out by the revenue. However, the Tribunal found merit in the assessee's argument, considering the bonafide nature of the mistake and the fact that the deduction had been allowed in earlier years. Citing relevant legal precedents, the Tribunal directed the Assessing Officer to delete the penalty imposed under section 271(1)(c) of the Act.

The Tribunal's decision was based on the principle that the mistake made by the assessee in claiming the deduction u/s 10B was bonafide, especially in light of the recent amendment withdrawing the deduction. The Tribunal considered the assessee's compliance with taxation after the error was pointed out and the fact that the deduction had been allowed in previous years. By relying on legal judgments emphasizing bonafide mistakes and considering the specific circumstances of the case, the Tribunal concluded that the penalty imposed under section 271(1)(c) should be deleted. The decision highlighted the importance of bonafide intentions and the impact of legal amendments on tax deductions, providing relief to the assessee in this case.

Overall, the Appellate Tribunal ITAT Indore allowed the appeal filed by the assessee, directing the Assessing Officer to delete the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The Tribunal's decision was based on the bonafide nature of the mistake made by the assessee in claiming the deduction u/s 10B, considering relevant legal precedents and the specific circumstances of the case.