Case Law Details
Eureka Outsourcing Solutions Pvt. Ltd. Vs DCIT (ITAT Mumbai)
In a significant judgment, the Income Tax Appellate Tribunal (ITAT) in Mumbai has set a precedent by deleting the penalty levied under section 271(1)(c) of the Income Tax Act, 1961, against Eureka Outsourcing Solutions Pvt. Ltd. for the Assessment Year 2015-16. The tribunal’s decision underscores the principle that making an incorrect claim does not tantamount to furnishing inaccurate particulars of income.
Case Background: Eureka Outsourcing Solutions Pvt. Ltd. faced a penalty of Rs.3,39,616 under section 271(1)(c) for allegedly furnishing inaccurate particulars of its income. The contention revolved around the disallowance related to lease equalization, where the company inadvertently accounted for rent on a straight-line method, contrary to its regular practice of accounting for yearly increases in rent due to lease agreements. The difference in lease equalization was initially disallowed by the assessee for a lesser amount than what was deemed accurate by the Assessing Officer (AO).
Tribunal’s Observations: The ITAT meticulously reviewed the submissions from both sides, focusing on whether the assessee’s action constituted the furnishing of inaccurate particulars. The tribunal noted that the assessee voluntarily sought to revise the computation during the assessment proceedings upon realizing the mistake. This act was considered a bona fide error without any intention to conceal or misrepresent income details.
The tribunal cited several landmark judgments, including the Supreme Court’s ruling in CIT vs. Reliance Petro Products Pvt. Ltd., which stated that making an incorrect claim in law does not amount to furnishing inaccurate particulars. This foundational principle played a crucial role in the tribunal’s decision-making process.
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