9911796707
TMI Blog2018 (8) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ereby making an addition of Rs. 5,72,369/- on account of provision of gratuity which the assessee had surrendered vide his letter dated 09.12.2013. In the reassessment proceedings, penalty u/s 271(1)(c) of the IT Act was initiated and same was levied by the Assessing Officer of Rs. 1,77,000/- vide order dated 29.08.2014. Before the ld. CIT(A), the assessee made written submissions and relied upon some cases laws. The ld. CIT(A) after considering the submissions of the assessee, dismissed the appeal filed by him vide impugned order. The ld. CIT(A) in support of his decision also relied upon some case laws. Aggrieved by the impugned order, the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee has submitted a paper book containing 23 pages including the written submissions. The submissions placed before us read as under : 5.1 The Assessee's Chartered Accountant while computing the computation of income inadvertently made an error and failed to add the amount of Rs. 5,72,3697- to the taxable income. This was an inadvertent mistake and there was no intention on the part of the Chartered Accountant or the company to conceal income or declare inaccurate parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly disclosed the provision in the Balance sheet and has only failed to add it back to income in the computation of income. This is borne by the fact that the Id. A.O. has detected this from the Balance sheet. Disclosure in Balance sheet is disclosure - Suprement court in CIT v Corporation bank Ltd 254 ITR791 (2002) SC - Needle Industries (I) Ltd v CIT (1990) 183 ITR 393 Thus there is no failure on the part of the assessee to disclose the provision of Gratuity and it was only due to a mistake on the part of the Chartered Accountant, that in the computation of income the assessee did not add back the gratuity to the taxable income. HUMAN ERROR A mistake is a human error and can be committed by any one and that does not warrant a penalty. The following case laws state the same ratio: CASE LAWS [2012] 25 taxmann.com 400 (SC) SUPREME COURT OF INDIA Price Waterhouse Coopers (P.) Ltd. v. Commissioner of Income-tax, Kolkata-l* Section 271(1)(c), read with section 37(1), of the Income-tax Act, 1961 - Penalty - For concealment of income - Bona fide mistake -Assessment year 2000-01 - Assessee firm filed its returnS.H. KAPADIA, CJ. AND MADAN B. LOKUR, J. CIVIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statement of amortiisation for 1969-70. On scrutiny, the ITO discovered that amortization in respect of two films had already been considered in drawing up the profit and loss account. The assessee admitted this error and agreed to the addition of the two amounts. t Penalty for concealment was imposed: Held, that it was a case of accidental and inadvertent mistake. Since the assessee had disclosed the basic facts by submitting the profit and loss account and the amortization account there was no attempt at concealment. The penalty levied was, consequently, illegal. Mahadeswara Movies v. CIT, (1983) 144 ITR 127 (Karn) 6.5 A wrong claim with disclosure of full facts, - Where the assessee, while disclosing extra interest charged over and above the limit fixed under Kerala Money Lenders Act, 1958, had wrongly claimed the excess as not liable to tax having realized the same due to misconception of law, since there was no concealment of the fact of receipt, but only a claim that it was not taxable, though such claim was misconceived, penalty is not leviable. CIT v Santosh Financiers (2001) 247 ITR 742 (Ker) following the rationale of the decision of the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's claim with respect to depreciation and capital loss was found erroneous- When said fact was brought to assessee's notice, it offered amount of difference for taxation -Assessing Officer, however, levied penalty under section 271(1)(c) - Commissioner (Appeals) deleted penalty holding that it was bona fide inadvertent mistake - .Admittedly, even after making some disallowance on both counts, tax required to be paid as per section 115JB remained same - Whether in absence of any material to hold that assessee had either concealed particulars of his income or furnished inaccurate particulars, penalty under section 271(1)(c) was rightly cancelled - Held, yes [Paras 4,5 & 6] [In favour of assessee] [2013] 40 taxmann.com 17 (Andhra Pradesh) HIGH COURT OF ANDHRA PRADESH Commissioner of Income-tax v. Ms. Sania Mirza* MADAN B. LOKUR, CJ. AND SANJAY KUMAR, J. ITTA NO. 526 OF 20111 FEBRUARY 9,2012 Section 271(1)(c), read with section 4, of the Income-tax Act, 1961 - Penalty - For concealment of income [Disallowance of claim, effect of] - Assessment year 2004-05 - Assessee, a tennis player, did not offer to tax amount received as awards from Government and from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The most important aspects of the Section 271(1)(c) are concealed and inaccurate. 7.1.1 Concealed The first part of the section clearly states that the assessee should have concealed his income which basically mean to hide. It is humbly submitted a) The.subject matter of addition i.e. Gratuity was only a mistake. b) that everything was disclosed in the income tax returns and the accompanying documents such as balance sheet etc. and once an item is disclosed it cannot be taken as undisclosed or concealed. as both these are diagonally opposite to each other. 7.1.2 Our submission on Explanation 1 A) With reference to the abqve matters, the assessee had offered a cogent explanation for the failure to add back Gratuity and a plain reading of the orders of the Ld. AO clearly show that the assessee had submitted valid explanation and the Ld. AO had not found the explanation to be false. The interpretation of the section as explained above may fall under the parameters wrong or right but definitely not true or false, therefore, this part of the explanation fails to attract the penalty. B. In this case, by submitting the computations of Income of the past and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, no useful purpose can be served to in holding such as person liable for it and its consequences. Thus, an accused should not be found guilty of an offence against the criminal law unless he has a guilty mind. The Hon'ble Supreme Court in Anantharam Verrasinghasu & Co. V. CIT. (1980) 123 ITR 457 (SO has concluded that. 'Before a penalty can be imposed it, the entirety of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has Consciously concealed particulars of his income or deliberately furnished inaccurate particulars. The mere falsity of the explanation given by the assessee is insufficient without there being in addition cogent material or evidence from the necessary conclusion attracting a penalty could be drawn'. 7.1.7 IMPOSING OF PENALTY IS NOT MANDATORY It is humbly prayed before your honor that liability to penalty is incurred whenever there is a breach or contravention of a statutory provision or there is a default or an omission to perform a statutory duty for which provisions for levy of penalty exist in the relevant enactment. The imposing of penalty in every s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is purely discretionary Penalty proceedings are quasi-criminal proceedings in nature and hence penalty need not ordinary be levied unless the assessee either acted in defiance of law or acted in conscious disregard of its obligation. We pray before your honor to kindly drop the penalty proceeding in this matter.' 4. On the other hand, the ld. DR relied on the orders of the lower authorities and submitted that the authorities below are justified in imposing penalty u/s. 271(1)(c) of the IT Act for filing inaccurate particulars of income. It is submitted that if reassessment proceedings had not been taken up, the assessee would have escaped levy of tax. The case laws relied by the assessee are not applicable being distinguishable on facts. 5. After hearing both the sides and perusing the entire material available on record and also going through the detailed submissions of the assessee including various case laws, we find no justification to sustain the penalty imposed in the instant case. It is notable that though the provision for gratuity was not added back while computing the income of the assessee, but in the balance sheet, the assessee had disclosed it, as provision fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
