2019 (4) TMI 665 - AT - Income Tax

Penalty u/s 271(1)(c) - error in counting the eligible assessment years from the initial assessment year for claim of deduction u/s 80IC - realising mistake revise computation filed and paid tax before assessment - human error or willful false claim - HELD THAT - On the basis of the audit report the assessee claimed the deduction u/s 80IC. There is no dispute that the under taking of the assessee is eligible for deduction u/s 80 IC and therefore, it can be safely concluded that the claim was not a false claim. As mentioned elsewhere in the audit report itself the auditors have mentioned the initial assessment year as A.Y. 2009-10 u/s 80IC the assessee is eligible for 100% deduction for first five assessment years starting from the initial assessment year. The Chartered Accountant has included the assessment year under consideration as the 5th assessment year since no deduction was claimed in A. Y. 2009-10 and therefore the chartered accountant counted the eligible assessment years from A. Y. 2010-11. In our considered opinion this clearly shows the human error and cannot partake the colour of intentional or willful claim. In the case in hand the assessee was very much eligible for claim of deduction u/s 80 IC of the Act and due to the error in counting the eligible assessment years from the initial assessment year the error has crept for which it cannot be said that the assessee has willfully and intentionally claimed the deduction. No fit case for the levy of penalty u/s 271 (1) (c) of the Act. - Decided in favour of assessee.

Summary

Issues:
Penalty imposition under section 271(1)(c) of the Act for claiming incorrect deduction u/s 80 IC.

Analysis:
The appeal was filed against the CIT(A)'s order confirming the penalty imposition of ?43,58,400 under section 271(1)(c) of the Act for the assessment year 2014-15. The appellant, a proprietor eligible for deduction u/s 80 IC of the Act, realized an error in claiming 100% deduction instead of 25%. The revised return was filed after the limitation period, and the tax difference was paid before the assessment completion. The Assessing Officer alleged deliberate concealment of income, initiating penalty proceedings. Despite the appellant's explanation of a genuine mistake promptly rectified, penalty was levied. The CIT(A) upheld the penalty, leading to the appeal.

The tribunal noted the appellant's eligibility for deduction u/s 80 IC, supported by audit reports. The error in counting eligible assessment years was attributed to the Chartered Accountant's inadvertent mistake, not intentional concealment. Citing the Price Water Coopers case, the tribunal emphasized that penalties are unwarranted for inadvertent errors without intent to deceive. Distinctions were drawn from the Dharmendra Textile and Zoom Communication cases, highlighting the lack of willful concealment in the present case. The tribunal referenced the Deep Tools Pvt. Ltd. case, emphasizing the importance of bona fide mistakes by professionals and the absence of collusion or malice. Ultimately, considering the totality of facts, the tribunal found no basis for penalty imposition and directed the Assessing Officer to delete the penalty amount, allowing the appeal.

In conclusion, the tribunal set aside the CIT(A)'s decision and ruled in favor of the appellant, emphasizing the absence of intentional concealment and the genuine nature of the error in claiming the deduction.