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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO
आदेश / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This is an appeal filed by the Assessee directed against the Order of the learned Commissioner of Income Tax (Appeals)-1, Chennai (hereinafter called as ‘CIT(A)’) dated 27.01.2017 for the Assessment Year (AY) 2008-09.
2 -: 2. The brief facts of the case are as under:
The appellant is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of manufacture and trading of metal cutting tools. The return of income for the A.Y 2008-09 was filed on 29.09.2008 disclosing total income of Rs. 4,81,11,038/-.
Against the said return of income, the assessment was completed by the Dy. Commissioner of Income Tax, Company Circle-I(1), Chennai (hereinafter called “AO”) vide order dated 27.12.2016 passed u/s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) at total income of Rs. 5,14,12,360/-. While doing so, the AO made addition on account of hire purchase transactions of Rs. 9,42,492/-. This addition was made by the AO on alleged excess lease rental of Rs. 9,42,492/- was claimed by the appellant, it was conceded by the appellant during the course of assessment proceedings. The appellant-company conceded that by mistake excess rental amount of Rs. 9,42,492/- was claimed, which was payment towards higher purchase charges. Based on this, the AO initiated the penalty proceedings u/s. 271(1)(c) of the Act by issuing show cause notice u/s. 274 r/w s. 271(1)(c) of the Act dated 27.12.2010. In response to the show cause notice, it was submitted that excess claim was made by inadvertence and voluntarily agreed for addition by filing revised statement of total income during the course of assessment proceedings and therefore, no penalty should be levied. However, the 3 -: AO rejected the above explanation by holding that the appellant- company had not filed any revised return of income and the appellant had intentionally made excess claim of lease rentals but, for the scrutiny proceedings, the excess claim would not have come to light. Accordingly, levied penalty of Rs. 3,20,354/- vide order dated 29.06.2011 passed u/s. 271(1)(c) of the Act. Being aggrieved, an appeal was filed before ld. CIT(A), who vide impugned order dismissed the appeal. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us in the present appeal.
The ld. AR submitted that it is only because of inadvertent mistake excess claim of lease rental was made, on noticing the mistake the appellant agreed to addition and additions made on account of inadvertent mistakes does not entail the penalty. Placed reliance on the decision of Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd. Vs. CIT [2012] 348 ITR 306 (SC). On the other hand, the ld. Departmental Representative (DR) placed reliance on the orders of lower authorities.
We heard the rival submissions and perused the material on record. The only issue in this case relates to levy of penalty u/s. 271(1)(c) of the Act. The addition in respect of which the penalty was levied by the AO was agreed by the appellant before AO on noticing the 4 -: mistake. The explanation tendered by the assessee that excess claim was made on account of inadvertent mistake cannot be disbelieved having regard to the circumstances mentioned therein. Therefore, the rejection of the explanation by the AO is not a valid and the ratio laid down by the decision of the Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd., supra, is squarely applicable to the facts of the present case and accordingly, we direct the AO to delete the penalty levied u/s. 271(1)(c) of the Act.
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 20th day of November, 2019 in Chennai.