SRIKRISHNA ARJUN TRADING & INVESTMENT CO.(P) LTD.,,KOLKATA vs. DCIT, CIRCLE - 5, KOLKATA, KOLKATA

Srikrishna Arjun Trading & Investment Co. (P) Ltd. Assessment Year: 2007-08 long term capital gains and again as an expenditure in profit & loss account. The Assessing Officer noted that the assessee has not disclosed particulars of income correctly and claimed double deduction therefore,it was an enough ground for imposition of penalty u/s 271(1)(c) of the Act. Thereafter, the Assessing Officer levied penalty of Rs.30,294/- (tax @20% of Rs.1,35,000/- and S.C &E.Cess) being the amount of tax sought to be evaded vide order dated 29.04.2010.

Aggrieved by the stand so taken by the assessing officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the penalty imposed by the Assessing Officer observing as follows:

Aggrieved by the order of the ld CIT(A), the assessee is in appeal before us.

The ld. Counsel for the assessee has submitted before us that the assessee claimed brokerage of Rs.1,35,000/- in computing long term capital gains. However, it failed to add back in computing the business income of the year. During the penalty proceedings, the assessee submitted the followings:

Per contra, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for sake of brevity.

We have given a careful consideration to the rival submissions and perused the materials available on record. We note that double deduction has claimed by the assessee due to the wrong legal advice given by the counsel of the assessee. The assesseedoes not have any knowledge about the income tax proceedings and he solely depends on the advice of the counsel and therefore, the double deduction was wrongly claimed due to wrong legal advice of the assessee`s Chartered Accountant ( Counsel). We note that if the particulars are furnished and there is a mistake in calculation and wrong claim due to mistake, does not amount to concealment of income. Besides this, the penalty amount of Rs.30,294/- is very smalland the mistake made by the assessee’s lawyer/CA may constitute sufficient and reasonable cause for not imposing penalty. We note that the assessee claimed brokerage of Rs.1,35,000/- in computing long term capital gains and failed to add back in computing the business income of the year, therefore, the penalty u/s 271(1)(c) was imposed on the assessee. We note that the assessee should not suffer because of the mistake made by his chartered accountant. We also note that said mistake is unintentional and therefore, the penalty should not be levied, for that we rely of the judgment of the Hon`ble Supreme Court in the case of M/s Price Waterhouse Copers ( P) Ltd Vs Commissioner of Income Tax [2012] 25 taxrnann.corn 400 (SC) where in a similar set of circumstances, it was held by the Hon'ble Apex Court that where in tax audit report filed by assessee, it was indicated that provision towards payment of gratuity was not allowable but assessee failed to add said provision to total income, no penalty could be imposed for such mistake, as it was a bona fide and inadvertent error.