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TMI Blog2022 (8) TMI 1134X X X X Extracts X X X X X X X X Extracts X X X X ..... th out of interest on car loan, and 1/3 out of telephone expenses were also suo motu disallowed by the assessee in computation of income filed with return of income (loss). The total amount of suo motu disallowance made by the assessee in computation of income filed with return of income, on account of personal use of the Directors of the assessee company is, Rs.4,40,942/- (including the aforesaid amount of Rs.3,07,651/-). However, the assessee made a computational error in not disallowing 1/6th out of expenses on car amounting to aforesaid Rs.1,63,263/- being 1/6th out of motor car expenses. We accept the assessee s claim in the facts and circumstances of the specific case before us, that this computational error was due to oversight and inadvertent mistake, and that the error was a bonafide one. We are of the view that the present case before us is squarely covered in favour of the assessee and against Revenue by order of Hon ble Supreme Court in the case to Price Waterhouse Coopers (P.) Ltd. vs. CIT[ 2012 (9) TMI 775 - SUPREME COURT] Thus inadvertent and bonafide mistake made due to oversight did not amount to furnishing inaccurate particulars of income, or concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axable income and offered the same for taxation. Hence, the expenses of Rs. 1,68,263/- on account of personal nature are hereby disallowed and added back to the income of assessee. (Addition Rs. 1,68,263/- ) 3.1 For the above reason, I am satisfied that the assessee company has attracted the provisions of section 27l(l)(c) of the Act by furnishing inaccurate particulars of its income, for which penalty proceedings u/s 271(l)(c) of the Act are being initiated separately. 4. With the above remarks, the total income/loss of the assessee company is recomputed as under: - Gross total loss as per Return of Income Rs. (50,39,439)/- Add: Disallowance of expenses Rs. 1,68,263/- Total Income/loss Rs. (48,71,176)- 5. Assessed at a loss of Rs. (48,71,176)/- . Credit for TDS, advance tax and regular taxes paid after verification is being given. Interest u/s 234A, B, C D of the Act is being charged, as applicable. Demand notice u/s 156 of the Act along with challan is being issued. Penalty notices u/s 274 r.w.s. 27l(1)(c) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. - On passing of the above order, the learned AO has assessed loss at Rs.48,71,176/-, the above said disallowance was only due to bonafide/inadvertent mistake by the appellant while making computation of income. -Thereafter, proceedings under section 271(1)(c) were initiated by the Id. AO and appellant had duly replied to the show cause notice issued by the AO. However, the AO did not accept the submission filed by the appellant and had levied penalty of Rs.51,993/- on the above by passing order u/s 271(1)(c) of the Act. -Against the order passed by AO, appellant had filed appeal before learned CIT(A). The learned CIT(A) dismissed the appeal stating that the explanation of the appellant cannot be held to be bonafide in the context of the facts of the case. -Aggrieved by the order of learned CIT(A), the appellant had filed appeal before your lordships. BACKGROUND In the present case under consideration, the appellant had suo-moto disallowed a part of its expenses as personal expenses of the directors in its computation of income (Refer Annexure-A) ,the details of which are given as under: In Schedule BP of Income Tax Return (Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not constitute a deliberate act of suppressio veri or suggestion falsi. The appellant had disclosed the particulars of all the expenses incurred during the year in the Audited Financial Statements for the relevant year and details of such expenses as and when called for during the course of assessment proceedings werealso filed. It was further submitted that during the course of assessment proceedings, the assessee was asked to furnish the details of expenses incurred and to explain as to why expenses be not disallowed. In response thereto, the assessee had filed reply giving explanation regarding the same. Accordingly, all facts relevant to the issue of disallowance were duly disclosed by the assessee. There is no finding that assessee has concealed any of the aforesaid particulars or factually inaccurate particulars either in the return of income or during the assessment proceedings. In such circumstances, the assessee cannot be said to have furnished inaccurate particulars of income, warranting imposition of penalty u/s 271(1)(c) of the Act. In view of the above, your lordships would agree that it is not a case where the appellant had concealed any part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of hearing before us, there was no material dispute regarding facts of the case between the representatives of two sides, i.e., Ld. AR for the assessee and Ld. Sr. DR for Revenue. It is not in dispute that the assessee filed revised computation of income/loss, offering the aforesaid amount of Rs.1,68,263/- for addition, in the course of assessment proceedings before the Assessing Officer. It is also not in dispute that the assessee company had disallowed a part of the expenses as personal expenses of the Directors, in its computation of income, except the aforesaid amount of Rs.1,68,263/-. It was not the case of the Ld. Sr. DR for Revenue, at the time of hearing before us, that the assessee s case is not squarely covered in favour of the assessee and against the Revenue by the judgments in the cases of (i) Price Waterhouse Coopers (P.) Ltd. vs. CIT [2012] 25 taxmann.com 400/211 Taxaman 40/348 ITR 306(SC) (ii) DCIT, Mumbai Vs Shah Rukh Khan [2018] 93 taxmann.com 320 (Mumbai-Trib.) (iii) CIT Vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322/322 ITR 158 (SC) (iv) Tristar Intech (P.) Ltd. vs. ACIT [2017] 88 taxmann.com 392 (Delhi-Trib.) (v) Vimalachal Print Pack (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the absence of due care, in a case such as the present does not mean that the assessed is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars. 21. Under these circumstances, the appeal is allowed and the order passed by the Calcutta High Court is set aside. No costs. (C.2) We are also of the view, in the specific facts and circumstances of the case before us, that the inadvertent and bonafide mistake made due to oversight did not amount to furnishing inaccurate particulars of income, or concealment of income. (C.2.1) In view of the foregoing and respectfully following the order of Hon ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. vs. CIT (supra); we are of the view in the specific facts and circumstances of the present case before us, that this is not a fit case for levy of penalty u/s 271(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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