Case Law Details

Case Name : Gujarat State Electricity Corporation Ltd. Vs DCIT (ITAT Ahmedabad)
Appeal Number : ITA No. 1778/Ahd/2017
Date of Judgement/Order : 30/09/2021
Related Assessment Year : 2007-08

Gujarat State Electricity Corporation Ltd. Vs DCIT (ITAT Ahmedabad)

During the course of assessment, the Assessing Officer has noticed that assessee has accounted interest expenses twice of Rs. 11.90 crores, therefore, the same was disallowed and also levied penalty of Rs. 1,46,48,271/- u/s. 271(1)(c) of the act on the combined amount of disallowance u/s. 14A and disallowance of interest. After perusal of the material on record, it is undisputed fact that aforesaid expenditure was twicely reflected in the annual account of the year under consideration and during the course of assessment and appellate proceedings the assessee has brought to the notice of the lower authorities that same was rectified by showing the said expenditure as prior period income in the subsequent year. The assessee has also placed copy of income tax return for assessment year 2008-09 which was filed on 30th Sep, 2008 demonstrating that the same was shown as income in the subsequent year and not in Sep, 2009 as contended by ld. Departmental Representative. In the light of the above fact and circumstances, we have also gone through judicial pronouncements referred by the ld. counsel decision of 322 ITR 158 (SC) Reliance Petro-Products Pvt. Ltd. & 348 ITR 306 (SC) Price Watercoopers Pvt. Ltd. wherein it is held merely because assessee had claimed expenditure which claim was not accepted or was not acceptable to revenue that by itself would not attract penalty u/s. 271(1)(c) of the act. We have also gone through the judicial pronouncement of Price Waterhouse Coopers (P) Ltd. wherein the Hon’ble Supreme Court held that assessee firm filed its return of income. It was a bonafide and inadvertent error. Assessee was not guilty of either furnishing inaccurate particulars or attempting to conceal its income, imposition of penalty was unjustified. In the light of the above facts and findings, we observed that assessee had accounted the provision for interest twice by mistake on which the Assessing Officer has levied penalty for furnishing inaccurate particulars of income. However, it is noticed that assessee itself shown the said expenditure as income in the subsequent assessment year 2009-10 and demonstrated from the copy of return that the same was filed on 30th Sep, 2008 before detecting the discrepancy under scrutiny assessment. Therefore, necessary correction has already been done by the assessee before detecting the mistake pointed out by the Assessing Officer in the assessment proceedings for the year under consideration. Looking to the facts and findings of judicial pronouncements as referred above, we consider that decision of ld. CIT(A) in sustaining the impugned penalty is not justified. Therefore, we direct the Assessing Officer to delete the impugned penalty. Accordingly, this appeal of the assessee is allowed.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This assessee’s appeal for A.Y. 2007-08, arises from order of the CIT(A)-1, Vadodara dated 19-05-2017, in proceedings under section 271(1)(c) of the Income Tax Act, 1961; in short “the Act”.

2. The solitary ground of appeal of the assessee is directed against the decision of ld. CIT(A) in confirming the penalty levied u/s. 271(1)(c) on the addition made on account of disallowance of Rs. 11,92,00,000/- under the normal provision of the Income Tax Act.

Section 271(1)(c) penalty not imposable for Erroneous double provision for interest

3. The fact in brief is that assessee has filed return of income on 24th October, 2007 declaring total income of Rs. nil. The case was subject to scrutiny assessment. During the course of assessment, the Assessing Officer noticed that assessee has accounted interest expenses of Rs. 11,92,00,000/- twicely. Therefore, the same was disallowed and added to the total income of the assessee under the normal provision and in book profit u/s. 115JB of the act. The Assessing Officer has also levied penalty u/s. 271(1)(c) of the act for furnishing inaccurate particulars of income.

4. During the course of appellate proceedings before us, the ld. counsel has filed paper book comprising detail and copy of document filed before the Assessing Officer and ld. CIT(A). The ld. counsel has submitted that assessee had accounted the provision for interest twice by mistake and on realizing the mistake rectification entries were passed in the subsequent year and same was shown as income. The ld. counsel has also enclosed the copies of document and income tax return in the paper book showing that the same was shown as income in the subsequent year. The ld. counsel has also pleaded that assessee is state owned public sector undertaking and the mistake occurred was duly corrected and return of income for the assessment year 2008-09 after showing income of Rs. 11.90 crores was filed before detecting the discrepancy under scrutiny assessment for the year under consideration. Therefore, it cannot be stated to be that assessee has taken remedial action after detecting the mistake by the Assessing Officer. The ld. counsel has also placed reliance on the decision of 322 ITR 158 (SC) Reliance Petro-Products Pvt. Ltd. & 348 ITR 306 (SC) Price Watercoopers Pvt. Ltd. The ld. Departmental Representative has supported the order of lower authorities and contended that assessee is a public sector undertaking and its accounts are added.

6. Heard both the sides and perused the material on record. During the course of assessment, the Assessing Officer has noticed that assessee has accounted interest expenses twice of Rs. 11.90 crores, therefore, the same was disallowed and also levied penalty of Rs. 1,46,48,271/- u/s. 271(1)(c) of the act on the combined amount of disallowance u/s. 14A and disallowance of interest. After perusal of the material on record, it is undisputed fact that aforesaid expenditure was twicely reflected in the annual account of the year under consideration and during the course of assessment and appellate proceedings the assessee has brought to the notice of the lower authorities that same was rectified by showing the said expenditure as prior period income in the subsequent year. The assessee has also placed copy of income tax return for assessment year 2008-09 which was filed on 30th Sep, 2008 demonstrating that the same was shown as income in the subsequent year and not in Sep, 2009 as contended by ld. Departmental Representative. In the light of the above fact and circumstances, we have also gone through judicial pronouncements referred by the ld. counsel decision of 322 ITR 158 (SC) Reliance Petro-Products Pvt. Ltd. & 348 ITR 306 (SC) Price Watercoopers Pvt. Ltd. wherein it is held merely because assessee had claimed expenditure which claim was not accepted or was not acceptable to revenue that by itself would not attract penalty u/s. 271(1)(c) of the act. We have also gone through the judicial pronouncement of Price Waterhouse Coopers (P) Ltd. wherein the Hon’ble Supreme Court held that assessee firm filed its return of income. It was a bonafide and inadvertent error. Assessee was not guilty of either furnishing inaccurate particulars or attempting to conceal its income, imposition of penalty was unjustified. In the light of the above facts and findings, we observed that assessee had accounted the provision for interest twice by mistake on which the Assessing Officer has levied penalty for furnishing inaccurate particulars of income. However, it is noticed that assessee itself shown the said expenditure as income in the subsequent assessment year 2009-10 and demonstrated from the copy of return that the same was filed on 30th Sep, 2008 before detecting the discrepancy under scrutiny assessment. Therefore, necessary correction has already been done by the assessee before detecting the mistake pointed out by the Assessing Officer in the assessment proceedings for the year under consideration. Looking to the facts and findings of judicial pronouncements as referred above, we consider that decision of ld. CIT(A) in sustaining the impugned penalty is not justified. Therefore, we direct the Assessing Officer to delete the impugned penalty. Accordingly, this appeal of the assessee is allowed.

6. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 30-09-2021

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