Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘C’, NEW DELHI
Before: SH. N. K. BILLAIYA & SH.K.N.CHARY
This appeal by the assesee is preferred against the order of the CIT(A)-17, New Delhi dated 27.07.2018 pertaining to A. Y. 2014-15.
2 2. The solitary grievance of the assessee is that the CIT(A) erred in confirming the action of the Assessing Officer in imposing penalty of Rs.43,58,400/- u/s 271 (1) (c) of the Act.
The representatives of both the sides were heard at length. Case records carefully perused and judicial decision relied upon by both the sides were duly considered.
The facts on record show that the appellant is a proprietor of an under taking which is eligible for deduction u/s 80 IC of the Act.
The claim of deduction has been allowed in earlier assessment years also. As per the audit report exhibited at pages 100-103 of the paper book, the auditors have shown initial assessment years from when deduction is being claimed as A. Y.2009-10 and date of commencement of operation / activity by the under taking / enterprises has been shown as 26.08.2008. The profits and gains derived by the under taking / enterprise from the eligible business is shown at Rs.17008476/- and the deduction u/s 80 IC has been shown at 100% of the profits and gains mentioned here in above.
On the basis of this audit report the assessee filed its return of income and computed its taxable income accordingly.
The statement of computation of taxable income at normal tax is placed at page No.96 of the paper book and the computation of taxable income u/s 115 JC is placed at page No. 97 of the paper book.
However, during the course of the scrutiny assessment proceedings and on going through the claim of deduction the assessee realized that the mistake has been crept in counting the eligible years of the claim of deduction u/s 80 IC of the Act. The 3 assessee realized that for the year under consideration he is eligible for deduction @ 25% and not 100%. Since the period of limitation for filing the revised return of income had expired, therefore, the revised computation of income was filed claiming the deduction u/s 80 IC of the Act @ 25%.
Since earlier the assessee had paid tax on taxable income as per section 115 JC of the Act and since now the taxable income under the normal provision of the Act was higher the tax difference alognwith interest difference was immediately paid on 04.08.2016. The assessment order dated 03.10.2016 framed u/s 143(3) of the Act was completed by the Assessing Officer as per the revised computation of income allowing deduction u/s 80 IC of the Act @25%.
However, the Assessing Officer observed that it was a deliberate attempt on the part of the assessee conceal income to the extent of Rs.12755247/- accordingly penalty proceedings u/s 271 (1) (c ) of the Act were separately initiated.
After issuing a show cause notice and after considering the submissions of the assessee the Assessing Officer observed that the assessee is taking shelter behind bona fides and inadvertent error whereas the intention was to conceal the taxable income and proceeded by levying penalty of Rs.43,58,400/-.
The assessee accordingly agitated the levy of penalty before the CIT(A) but without any success.
Before us the counsel reiterated that due to the bona fides mistake of the Chartered Accountant and due to the inadvertent error the assessee had claimed deduction @ 100% and as soon as the mistake was realized, the assessee immediately corrected the 4 claim and the taxes alongwith interest was also paid before the completion of the assessment proceedings.
Per contra the DR strongly supported the findings of the lower authorities and relied upon several decisions including Hon’ble Supreme Court decision in the case of Dharmendra Textiles Processors 295 ITR 244 and Hon’ble Delhi High Court in the case of Zoom Communication Private Limited 327 ITR 510.
The facts explained elsewhere clearly show that on the basis of the audit report the assessee claimed the deduction u/s 80 IC of the Act. There is no dispute that the under taking of the assessee is eligible for deduction u/s 80 IC of the Act and therefore, it can be safely concluded that the claim was not a false claim. As mentioned elsewhere in the audit report itself the auditors have mentioned the initial assessment year as A.Y. 2009-10 u/s 80 IC of the Act the assessee is eligible for 100% deduction for first five assessment years starting from the initial assessment year. However, the Chartered Accountant has included the assessment year under consideration as the 5th assessment year since no deduction was claimed in A. Y. 2009-10 and therefore the chartered accountant counted the eligible assessment years from A. Y. 2010-11. In our considered opinion this clearly shows the human error and cannot partake the colour of intentional or willful claim.
The Hon’ble Supreme Court in the case of Price Water Coopers reported in 348 ITR 306 has held that imposing of penalty would be unwarranted in a case where the assessee had considered an inadvertent and bonafide error and had not intended to or attempted to either conceal its claim or furnish inaccurate particulars.
5 17. The reliance placed by DR in the case of Dharmendra Textile (supra) is misplaced since in that case the Hon’ble Supreme court has held that penalty u/s 271 (1 ) (c ) is a civil liability for which willful concealment is not an essential ingredient. The decision of the Hon’ble Delhi High court in the case of Zoom Communication (supra) is also misplaced since in that case the assessee had claimed income tax payment as expenditure which was not at all allowable under the Act. On such claim the Hon’ble High Court had observed that if the return of income was not selected for scrutiny the assessee would have been allowed income tax as an expenditure.
However, in the case in hand the assessee was very much eligible for claim of deduction u/s 80 IC of the Act and due to the error in counting the eligible assessment years from the initial assessment year the error has crept for which it cannot be said that the assessee has willfully and intentionally claimed the deduction.
The Hon’ble Punjab & Haryana High Court in the case Deep Tools Pvt. Ltd. reported in 274 ITR 603 has held :-
There is nothing to show that mistake by the chartered accountant was not bona fide and mere fact that certificate issued by the chartered accountant was not in accordance with s. 80HHC (4), was not enough to hold that the mistake was not bona fide. At any rate, as far as the assessee is concerned, no mala fides can be attributed to it as the claim for deduction was based on the certificate of the chartered accountant with whom no collusion has been proved. In view of findings recorded by the Tribunal that error of the chartered accountant was inadvertent and did not lack fides, cancellation of order of penalty was clearly justified. Thus, no 6 question of law arises from the order of the Tribunal. Accordingly, this appeal is dismissed.
Considering the facts of the case in totality we do not find this to be a fit case for the levy of penalty u/s 271 (1) (c) of the Act. We accordingly set aside the findings of the CIT(A) and direct the Assessing Officer to delete the penalty of Rs.43,58,400/-. The appeal filed by the assessee is accordingly allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 29.03.2019.