GOPALKRISHNA NARLA RAO,MUMBAI vs. ITO WARD 16(2)(4), MUMBAI

Before us, learned counsel appearing for the assessee reiterated the stand taken before Departmental Authorities. Whereas, learned Departmental Representative submitted, the assessee offered additional income only after receiving the notice of the Assessing Officer. He submitted, had assessee’s case not been selected for scrutiny, the additional income offered by the assessee would have escaped assessment. Therefore, assessee did furnish inaccurate particulars of income while filing the original return of income.

We have considered rival submissions and perused the materials on record. We have also applied our mind to the judicial precedents cited before us by learned counsel for the assessee. Factually, there is no dispute that there is an upward variation of income to the extent of Rs.5,88,300/- declared by the assessee in the return of income and as determined by the Assessing Officer. It is evident, in the return of income, the assessee had declared income of Rs.21,23,940/-. While complying to queries of the Assessing Officer in course of assessment proceeding, the assessee found that inadvertently amount of Rs.3,62,966/-, being interest expenditure on house loan, was claimed as deduction twice by debiting interest and expenditure account as also claiming deduction while computing house property income. The assessee further noticed that amount of Rs.3,01,415/- required to be offered under the head income from other sources was taken to the income and expenditure account. Noticing these, in course of assessment proceeding assessee furnished revised computation of income offering the income under appropriate head resulting in revised total income of Rs.27,11,440/-. While completing the assessment, the Assessing Officer accepted the additional income offered by the assessee. However, he disallowed the interest expenses of Rs.13,34,368/- claimed against income from Futures and Options (F&O) business and added back to the income of the assessee. After setting off brought forward loss, the Assessing Officer determined the total income of Rs.27,11,440/-, the very same figure at which the assessee offered the total income in the revised computation of income. In other words, there is no variation between the income determined by the Assessing Officer and as offered by the assessee in the revised computation of income. Undoubtedly, the Assessing Officer had initiated proceedings for imposition of penalty u/s. 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income and has ultimately imposed penalty under the very same limb. Whereas, it is the say of the assessee that the variation in income between the return of income and revised computation of income was due to inadvertent error, which the assessee rectified immediately after it came to his knowledge in course of assessment proceeding. Thus, he submitted before us that being a bona fide mistake, penalty should be deleted. In this context, learned counsel has relied upon the following decisions: -

Commissioner of Income Tax vs. Reliance Petroproducts (P.) Ltd. [2010] 189 Taxman 322 (SC).

Price Waterhouse Coopers (P.) Ltd. vs. Commissioner of Income Tax [2012] 25 taxmann.com 400 (SC).

Notably, in course of assessment proceedings itself, after receiving the notice u/s. 142(1) of the Act the assessee filed a revised computation income offering certain additional income. It needs to be examined whether assessee’s explanation of omission of such income was due to inadvertence and oversight can be accepted. As could be seen from the facts on record, the assessee, both, in the original return of income as also the revised computation claimed set off of brought forward speculation loss of Rs.18,50,997/-. Whereas, the Assessing Officer has allowed brought forward loss at a much higher figure of Rs.31,85,365/-. These facts clearly vindicate assessee’s stand that there are various inadvertent computational errors while computing the income by the assessee. Merely because, the assessee is a practicing Chartered Accountant, it cannot be said that he cannot commit any mistake. In this context, we may refer to the decision of Hon’ble Supreme Court in case of ‘Price Waterhouse Coopers (P.) Ltd.’ (Supra). Thus, in our view, the assessee can be given benefit of doubt hence, cannot be accused of furnishing inaccurate particulars of income knowingly and deliberately. Thus, in the given facts and circumstances, we are of the view that assessee’s bona fide is proved upon furnishing of the additional income through revised computation of income. Moreso, when there is no variation in income declared by the assessee in the revised computation of income and as determined by the Assessing Officer. In view of the aforesaid, we delete the penalty-imposed u/s. 271(1)(c) of the Act.

In the result, appeal is allowed. Order pronounced in the open court on 16/03/2026.