Chhattisgarh State Power Transmission Company Limited Vs DCIT (Chhattisgarh High Court)
Conclusion: Penalty under section 271(1)(c) was not leviable as assessee had voluntarily disclosed a bona fide error in their return and assessee had proactively brought the error to the department’s attention and had never attempted to suppress income and that both the tax audit report and the revised return were filed well before the scrutiny assessment commenced.
Held: Assessee-a government-owned entity, had initially filed its income tax return for the assessment year 2016-17, declaring nil income after setting off carried-forward losses and reported book profits of Rs. 26.90 crore under the MAT provisions of Section 115JB. The tax audit report, which had been uploaded to the Income Tax Department portal, reflected the actual book profit as Rs. 35.74 crore. The difference of Rs. 8.84 crore was not due to any deliberate act of concealment or misstatement but arose from an error in entering the figures during return filing. During the scrutiny proceedings, and before the assessment was finalized, assessee voluntarily disclosed the discrepancy through a written submission. AO accepted the corrected computation but also imposed a penalty of Rs. 2.72 crore, alleging that assessee had furnished inaccurate particulars of income with an intent to evade tax. Assessee challenged the penalty before CIT (Appeals), who allowed the appeal and held that the error was merely a clerical mistake and not a case of deliberate concealment. Appellate Authority observed that the tax audit report had already disclosed the correct figures and there was no malafide intention on the part of the assessee, especially considering its status as a government entity. Revenue appealed to Tribunal, which reversed the CIT(A)’s decision and reinstated the penalty order. It was held that assessee had proactively brought the error to the department’s attention and had never attempted to suppress income and that both the tax audit report and the revised return were filed well before the scrutiny assessment commenced. The court ruled that the imposition of a penalty in such a case was not under the law, and there was neither concealment of income nor furnishing of inaccurate particulars, as the assessee disclosed a bona fide mistake upfront.
