Case Law Details
SLV Housing Development Corporation Vs ACIT (ITAT Bangalore)
Under Section 271(1)(c), two faults or omissions exposes the assessee to concealment penalty i.e. concealment of particulars of income and furnishing inaccurate particulars of such income. The assessee has admitted before the AO that the new auditor appointed, had pointed out certain mistakes in the expenses claimed by the assessee and submitted the revised computation correcting the wrong claim work-in-progress as expenditure. This fact is being confirmed by the AO in the assessment order. The assessee has filed a complaint before the Institute of Chartered Accountants of India against the auditor who had filed the original return of income of the assessee. In our considered view, in the instant case, what has emerged is that the assessee, having realised that the expenditure claimed was not tenable as pointed out by the new auditors, offered the amounts expended to be added to the income and, accordingly, paid the requisite tax. This was not a case in our opinion, where, the assessee could be said to have either concealed particulars or furnished inaccurate particulars of the income. It was, essentially, a case, where, an untenable claim for deduction of work-in progress had been made and that too based on the advice of a professional, i.e., Chartered Accountant. The explanation to section 271(1) provides that the penalty under subsection (c) is leviable when the person fails to prove that the explanation of facts is bona fide. In assessee’s case the wrong claim of the expenditure is not intentional and is based on a wrong professional advice. The fact that once the assessee is pointed out the error, the assessee has admitted the same before the AO and paid taxes is proof enough that there is no intentional concealment.
The coordinate bench of the Tribunal is assessee’s own case (supra) has examined the claim of the assessee with regard to wrong professional advice and had deleted the penalty u/s.271B stating that it is a ‘reasonable cause’. The assessee in the present appeal also contending the levy of penalty on the same premise that the assessee was under the bona fide belief that the accounts are maintained properly by the auditor and that there is no intention to conceal the income. In our view therefore, the ratio laid down by the coordinate bench of the Tribunal is applicable in the present case of the assessee. The delay in furnishing the revised computation is also considered by the coordinate bench of the Tribunal where the Hon’ble Tribunal has taken cognizance of the fact that severing relationship with earlier CA might take time.
In view of the foregoing discussions, we are of the view that the claim of the expenditure by the assessee is bona fide and accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the penalty levied u/s 271B(1)(c) for the year under consideration.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
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This is judgement is very important and also have practical value.
The judgments on in the TAXGURU portal are always of practical value .
Regards,
Jagadish Ambardekar