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TMI Blog2025 (1) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... (9) TMI 775 - SUPREME COURT] has held that where in tax audit report filed by the assessee, it was indicated that provision towards payment of gratuity was not allowable but assessee failed to add said provision to total income, no penalty could be imposed for such mistake. As in the intimation issued u/s 143(1) no such adjustment on account of non-payment of service tax liability and employees contribution to PF before the due date has been added. Thus, it is not a fit case for levy of penalty u/s 270A - Assessee appeal allowed. - Shri R. K. Panda, Vice President And Shri Vinay Bhamore, Judicial Member For the Assessee : Miss Aarti Thakkar For the Department : Shri Arvind Desai, Addl. CIT-DR ORDER PER R. K. PANDA, VP : This appeal filed by the assessee is directed against the order dated 24.03.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18. 2. There is a delay of 192 days in filing of this appeal before the Tribunal, for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was by mistake not added back to the total income of the assessee while filing of the return of income. It was submitted that this mistake was an apparent casting and error effect by the tax auditor and the company never had any intention of evading the tax. It was submitted that the company had already accepted the order demanding the tax on this mismatch and paid the tax. It was brought to the notice of the Ld. CIT(A) / NFAC that the service tax liability of Rs. 37 lakh was subsequently paid on various dates which are as under: 1. 12.03.2019 Rs. 1,55,000/- 2. 26.03.2019 Rs. 2,68,901/- 3. 26.03.2019 Rs. 1,71,440/- 4. 20.02.2020 Rs. 31,76,561/- 8. It was accordingly requested to delete the penalty so levied by the Assessing Officer. However, the Ld. CIT(A) / NFAC was not satisfied with the arguments advanced by the assessee and upheld the action of the Assessing Officer by observing as under: 5. Findings: The Grounds of appeal, the facts and circumstances of the case, the submissions of the assessee, the case laws adduced have been carefully considered. The facts of the case are that in the tax audit report, the Audit report, the Auditor had shown service tax liability of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any facts. 3. The learned CIT(A) NFAC failed to consider the submissions made by the appellant that the amount of disallowance was already pointed out by the Auditors in their report and there was no suppression of fact 4. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing. 10. The Ld. Counsel for the assessee at the outset submitted that it was due to a technical mistake on the part of the assessee that the amount of service tax liability not paid before the due date could not be added to the total income of the assessee. Referring to page 14 of the paper book, the Ld. Counsel for the assessee drew the attention of the Bench to the intimation issued u/s 143(1) of the Act dated 16.12.2017 and submitted that no such adjustment has been made by the CPC. Referring to the notice issued u/s 274 r.w.s. 270A of the Act dated 15.10.2019, copy of which is placed at page 26 of the paper book, she submitted that although the notice speaks of under-reporting / mis-reporting of income, however, the notice is silent regarding under which limb or clause of section 270A of the Act such penalty has been levied, since the same is missing. Refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court where the facts are identical to the facts of that of the assessee, penalty levied by the Assessing Officer and sustained by the Ld. CIT(A) / NFAC being not in accordance with law, should be deleted. 15. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A) / NFAC. He submitted that but for the selection of the case for scrutiny assessment the assessee would not have paid the taxes on the unpaid amount of service tax liability and late payment of employees contribution towards PF. The assessee in the instant case has not filed any revised return and not voluntarily offered the amount to tax. Therefore, the Ld. CIT(A) / NFAC was fully justified in sustaining the penalty levied by the Assessing Officer. 16. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that in the tax audit report the auditor had reported the service tax liability of Rs. 37 lakhs which was not paid on or before the due date. Similarly, empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be mis-reporting. It is also an admitted fact that there is complete absence of details as to which limb of section 270A of the Act was attracted in initiating the penalty proceedings. 18. We find the Hon'ble Supreme Court in the case of Price Waterhouse Coopers (P.) Ltd. vs. CIT (supra) has held that where in tax audit report filed by the assessee, it was indicated that provision towards payment of gratuity was not allowable but assessee failed to add said provision to total income, no penalty could be imposed for such mistake. The relevant observations of the Hon'ble Supreme Court from para 17 onwards read as under: 17. Having heard learned counsel for the parties, we are of the view that the facts of the case are rather peculiar and somewhat unique. The assessee is undoubtedly a reputed firm and has great expertise available with it. Notwithstanding this, it is possible that even the assessee could make a silly mistake and, indeed this has been acknowledged both by the Tribunal as well as by the High Court 18. The fact that the Tax Audit Report was filed along with the return and that it unequivocally stated that the provision for payment was not allowable under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the figures i.e. the closing WDV of block of assets as per the Income Tax Act and the closing WDV of block of assets as per the Companies Act, for the immediately preceding year, were available on record; but the incorrect figure was adopted by mistake by the Tax Auditor, and the same was relied upon by the appellant while filing its return of income. This oversight resulted in an excess claim of depreciation as per the return for an amount of Rs. 1.63 Crore. The appellant company has a declared Turnover to the tune of Rs. 978 Crore and returned income to the tune of Rs. 383 Crore for the year under consideration. The excess claim of depreciation made, as a result of this oversight, is less than even one percent of the returned income. The appellant company has been declaring returned income of more than Rs. 100 Crore and paying substantial taxes over the years. On considering the totality of facts, I am inclined to concur with the view that this cannot be a case of deliberate under reporting of income on part of the appellant. 6.2 Furthermore, I also note that the appellant has been consistent in offering explanation with regard to the said inadvertent error in computing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clauses, i.e. clause (b) to clause (f) of sub-section (9) of section 270A, are also not applicable to the facts of the present case. 6.4 Hon'ble High Court of Rajasthan in the case of Chambal Fertilizers and Chemicals Ltd. Vs Pr. CIT (2024) (158 taxmann.com 184) (Rajasthan) has held that where during scrutiny assessee realized aspect of merging GST Input Credit with expenses and same was suo-moto surrendered by assessee by revising its return, however revenue imposed penalty under section 270A and thereafter, rejected application of assessee under section 270AA, since revenue wasn't sure whether it was a case of misrepresentation or suppression of facts or claim of expense and application under section 270AA was rejected in a wholly cursory manner indicating that case of assessee was within ambit of clause (a) and (c) of section 270A(9) and without giving any cogent reasons, same could not be sustained. 6.5 Hon'ble ITAT, Mumbai Bench in the case of Alrameez Construction (P.) Ltd. Vs NFAC (2023) (152 taxmann.com 382) (Mumbai Trib.) has held that where Assessing Officer made addition under section 43CA read with section 56(2)(x), case of assessee did not fall in catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Authority in the impugned order has discussed the issue elaborately and in deleting the penalty levied u/s 270A of the Act has relied on the ratio of decision of the Hon ble Jurisdictional High Court in the case of Prem Brothers Infrastructure LLP Vs NFAC (2022) (142 taxmann.com 38 (Delhi). Learned DR has not been able to prove the case of assessee on different footing. Thus, in the light of binding precedents we do not see any infirmity. It is well said to err is human a bona fide error cannot be basis of imposition of penalty. Under the peculiarity of the facts of the present case the impugned action of the learned CIT(Appeals) is justified in deleting the impugned penalty, same is hereby affirmed. Grounds taken by the Revenue are dismissed. 20. We further find in the intimation issued u/s 143(1) of the Act dated 16.12.2017, no such adjustment on account of non-payment of service tax liability and employees contribution to PF before the due date has been added. In view of the above discussion and respectfully following the decisions cited (supra), we are of the considered opinion that it is not a fit case for levy of penalty u/s 270A of the Act. We, therefore, set aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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