HOTEL SAHIL PRIVATE LIMITED ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1(2), MUMBAI

This appeal by assessee is directed against the order of CIT(A)-47, Mumbai dated 26-07-2017 for AY 2012-13. The assessee has raised the following grounds of appeal:-

The brief facts of the case are that assessee filed return of income for A.Y. 2012-13 on 29-09-2012 declaring income of Rs.58,03,580/-. During the assessment proceedings, the AO noted that assessee has debited an amount of Rs.2,52,152/- under the head ‘loss on sale of fixed assets’(motor car). The AO asked the assessee to explain why the expenses claimed on sale of fixed asset should not be added back to the total income as the same is of capital in nature. In reply, the assessee stated that due to mistake, the assessee has claimed loss on sale of motor car of Rs.2,52,152/-. The assessee also claimed prior period expenses of Rs.600 under the head ‘other expenses. The AO disallowed loss on fixed asset (motor car) and prior period expenses while passing the assessment order on 22.01.2015 under section 143(3). The AO also initiated penalty proceedings u/s 271(1)(c). Notice u/s 274 r.w.s. 271(1)(c) dated 21-01-2015 was issued to the assessee. The assessee filed its reply dated 18-07-2015. In the reply, the assessee stated that there was no mala fide intention to conceal the income or to furnish inaccurate particulars. The assessee further stated that during the assessment they have offered the alleged loss on fixed asset for addition, which has been accepted and no initiation of penalty was warranted. The reply of assessee was not accepted by AO. The AO worked out the penalty @100% of the tax sought to be evaded. The AO worked out penalty of ITA 5857/Mum/2017 Rs.78,100/- vide his order dated 27-07-2015 passed under section 271(1)(c) of the Act. On appeal before the learned CIT(A), the action of AO was confirmed. Further aggrieved by the order of learned CIT(A), the assessee has filed present appeal before us.

We have heard the submission of learned authorised representative (Ld.AR) of the assessee and learned departmental representatives ( Ld. DR) for the revenue and perused the material available on record. The Ld.AR of the assessee submits that due to inadvertent mistake the assessee debited an amount of Rs.2,52,152/- on sale of fixed asset. Soon after it was realised during the assessment proceedings, the assessee voluntarily offered the same for assessment. There was a very minor claim of prior period expenses. The assessee also agreed for disallowance of such prior period expenses of Rs.600/-. There was no intentional or deliberate action on the part of assessee for furnishing of inaccurate particulars of income or concealment of income. The Ld.AR of the assessee submits that assessee himself accepted the unintentional mistake. In the reply to the show cause notice u/s 274 r.w.s.

On the other hand, the Ld. DR for the revenue supported the orders of lower authorities. The Ld. DR submits that had the return was not taken up for scrutiny, the income of assessee would have been escaped from assessment with respect to sale of fixed assets (motor car) and prior period expenses.

We have considered the rival submissions of the parties and perused the material available on record. There is no dispute that during the assessment, the AO from the perusal of P&L account noted that the assessee has debited an amount of Rs.2,52,152/- under the head ‘loss on sale of fixed asset (motor car)’and prior period expenses of Rs. 600/-. There is no further dispute that assessee accepted both the additions / disallowances voluntarily during the course of assessment. It is further not in dispute that no further appeal is filed by the assessee against such additions. We have further noted that in reply to the show cause notice under section 274 rws 271(1)(c) the assessee has explained that there was no malafide intention to conceal the income or particulars of income, the addition has been accepted in full. We have noted that the Hon’ble Supreme Court in the case of Price Water Coopers Pvt Ltd (PWC) vs CIT (supra) held that when the assessee due to bonafide and inadvertent error, the assessee while submitting its return, failed to add the provision of gratuity to its total income, the assessee

In our considered view, the ratio of the decision of Hon’ble Supreme Court in Price Water Coopers Pvt Ltd (PWC) Vs CIT (supra)) is squarely applicable on the facts of the present case. Therefore, considering the peculiarity of facts of the case, we are of the considered view that no penalty was leviable on such facts and circumstances. Therefore, we direct the Assessing Officer to delete the entire penalty.

In the result, appeal of the assessee is allowed. Order pronounced in the open court on 20-08-2019.