Case Law Details
Rane Industries Pvt. Ltd. Vs DCIT (ITAT Pune)
It is apparent from the assessment order itself that the assessee, when pointed out by the AO, admitted its inadvertent mistake in not adding back the above amounts totalling to Rs.78.26 lacs in the computation of total income, which were debited to the Profit & loss account.
It is clear from the nature of the amounts and the way of their depiction thereof in the Profit & loss account that the assessee inadvertently committed a mistake in not adding back the amount of income tax, etc paid by it in the computation of total income.
On being pointed out, the assessee accepted the disallowance and paid due tax thereon. It is not a case where the assessee tried to mislead the Revenue by intentionally claiming higher amount of deduction. Rather it is a case of inadvertent mistake in the computation of income.
The Hon’ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012) 348 ITR 306 (SC) has held that no penalty u/s.271(1)(c) can be imposed in respect of inadvertent and bona fide mistake committed by the assessee.
The Hon’ble jurisdictional High Court in CIT Vs. Somany Evergreen Knits (2013) 352 ITR 592 also deleted the penalty which occurred due to bona fide and inadvertent mistake of the Chartered Accountant while filing the return.
Since the facts and circumstances of the instant case amply show that the excess claim of deduction was due to bona fide and unintentional mistake, respectfully following the precedents, we order to delete the penalty.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee is directed against the order passed by the CIT(A) on 11-03-2020 confirming the penalty of Rs.24,37,233 imposed by the Assessing Officer (AO) u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) in relation to the assessment year 2014-15.
2. Briefly stated, the facts of the case are that the assessee debited to its Profit & loss account – Education cess on TDS amounting to Rs.98,246; Income tax paid of Rs.76,59,480; Penalty on TDS of Rs.16,602; and TDS paid of Rs.52,600. Such amounts totaling to Rs.78,26,928 were claimed in the Profit & loss account. During the course of assessment proceedings, the assessee was called upon as to why these amounts were not disallowed and added to the total income. In response, the assessee admitted the proposed disallowances by submitting that due to inadvertent mistake, the add back could not be made and even the Auditor also did not alert the assessee on this point. Thereafter, the AO imposed penalty amounting to Rs.24,37,233 u/s 271(1)(c) of the Act with reference to the above disallowances totaling to Rs.78.26 lacs, which came to be affirmed in the first appeal.
3. We have heard the rival contentions and gone through the relevant material on record. It is apparent from the assessment order itself that the assessee, when pointed out by the AO, admitted its inadvertent mistake in not adding back the above amounts totalling to Rs.78.26 lacs in the computation of total income, which were debited to the Profit & loss account. It is clear from the nature of the amounts and the way of their depiction thereof in the Profit & loss account that the assessee inadvertently committed a mistake in not adding back the amount of income tax, etc paid by it in the computation of total income. On being pointed out, the assessee accepted the disallowance and paid due tax thereon. It is not a case where the assessee tried to mislead the Revenue by intentionally claiming higher amount of deduction. Rather it is a case of inadvertent mistake in the computation of income. The Hon’ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012) 348 ITR 306 (SC) has held that no penalty u/s.271(1)(c) can be imposed in respect of inadvertent and bona fide mistake committed by the assessee. The Hon’ble jurisdictional High Court in CIT Vs. Somany Evergreen Knits (2013) 352 ITR 592 also deleted the penalty which occurred due to bona fide and inadvertent mistake of the Chartered Accountant while filing the return. Since the facts and circumstances of the instant case amply show that the excess claim of deduction was due to bona fide and unintentional mistake, respectfully following the precedents, we order to delete the penalty.
4. In the result, the appeal is allowed.
Order pronounced in the Open Court on 13th June, 2022.
