COMMISSIONER OF INCOME TAX - XVI vs. ARVIND NAGPAL

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ITA - 481 / 2013HC Delhi07 October 20131 pages
For Petitioner: SURUCHII AGGARWAL
AI SummaryDismissed

What did the High Court hold?

The Tribunal accepted the assessee's explanation that the discrepancies were due to bona fide and inadvertent mistakes, akin to human error. Relying on Supreme Court precedent, the Tribunal found that such mistakes, when explained and corrected, do not warrant penalty.

What were the facts?

The assessee disclosed short-term capital gains and paid tax at the applicable rate. The Assessing Officer initially proposed tax at a higher rate, which the assessee accepted and paid along with interest. The assessee also received dividend from a mutual fund, and a mistake in adjusting it against the cost price was rectified by filing a revised computation.

What were the issues?

Whether bona fide and inadvertent mistakes in tax computation and disclosure warrant penalty, and if dividend income from a mutual fund was correctly handled.

Which sections of the Income-tax Act were involved?

Section 94(7)

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IN THE HIGH COURT OF DELHI AT NEW DELHI . . . ITA 481/2013 . . . COMMISSIONER OF INCOME TAX ? XVI ..... Appellant . Through Ms. Suruchi Aggarwal, Sr. Standing Counsel. . . . versus . . . ARVIND NAGPAL ..... Respondent . Through . . . CORAM: . HON'BLE MR. JUSTICE SANJIV KHANNA . HON'BLE MR. JUSTICE SANJEEV SACHDEVA . . . O R D E R . 07.10.2013 . . . Tribunal has recorded a finding of fact accepting the explanation given by the assessee that it was a case of mistake. He noticed that there was no dispute about figures and the transactions in question. The first transaction and full gain was disclosed by the respondent-assessee as short-term capital gains. The assessee had paid tax @ 10% which was applicable to short-terms capital gains. The Assessing Officer had observed that tax at normal rate of 30% was applicable. The assessee accepted the said position and has paid tax and interest. . In Price Waterhouse Coopers Pvt. Ltd. Vs. Commissioner of Income Tax, (2012) 348 ITR 306 (SC), the Supreme Court deleted the penalty and has accepted that human errors do happen in spite of calibre, expertise and due care. Mistakes, when explained and shown to be bona fide, do not justify levy of penalty. It has been observed as under:- . ??The contents of the Tax Audit Report suggest that there is no question of the assessee concealing?its income. There is also no question?of the assessee furnishing any inaccurate particulars. All that happened in the present case is that through a bona fide?and inadvertent error?failed to add the provision for gratuity to its total income. This can only be described as a human error?which we are all prone to make. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. Consequently, given the peculiar facts of this case, the imposition of penalty on the assessee is not justified.? . (emphasis supplied) . . . On the question relating to addition of Rs.5,56,254/-, the tribunal has observed that the assessee had received the said amount as dividend from a mutual fund. As per Section 94(7) of the Income Tax Act, 1961, the assessee was required to reduce the dividend amount from the cost price of the units of mutual fund. This again, the tribunal has held, that was a bona fide mistake which was corrected/rectified by filing a revised computation of income. Full details and particulars had been submitted by the assessee to the Assessing Officer. We do not see any reason to interfere. . The appeal is accordingly dismissed in view of the findings of facts recorded by the tribunal. . . . . . SANJIV KHANNA, J. . . . . . . . SANJEEV SACHDEVA, J. . OCTOBER 07, 2013 . NA/VKR . . . $ 08 .

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