A.C.I.T., CC-1(1), KOLKATA, KOLKATA vs. M/S BHASKAR TEA & INDUSTRIES LTD., KOLKATA

At the outset Ld. AR submits the assessment was completed u/s. 143(3) of the Act vide order dated 20.12.2006 in which the additions were made on account of accrued interest of loan and disallowance of ₹80,56,794/-u/s. 43B r.w.s 36(1)(va) of the Act. The AO initiated the penalty proceedings for not considering the amount of ACIT CC-1(1) Kol. Vs. M/s Bhaskar Tea & Inds. Ltd. Page 2 ₹80,56,794/- in its computation of income. The assessee contested the penalty proceedings by pleading that by inadvertently the said amount had been missed out in computation of income. The AO not satisfied with the said submission imposed penalty of ₹28,90,875/- for concealment of inaccurate particulars of income. The CIT(A) cancelled the penalty by observing as under:- “4.2 I have considered the issue and the plea. Firstly, the said sum is not the appellant’s money nor income; for it is the employees contribution to PF. The appellant has no legal ownership of the employees PF contribution. The appellant is just the transient custodian until the appellant deposits account together with the employers contribution, in the PF scheme. The addition in the assessment – is just a technical denial of deduction due to operation of section 36(21)(va). It may be that in the definition of income in section 2(24), at clause (x) is included such sums – but, the undeniable fact is that such sums do not legally belong to the appellant. I consider that such sums had been listed at the clause x) to the section 2(24) so that the employer is vigilant about his liabilities and duties towards his workers social security. In the facts of this instant case, I consider that the appellant was then under financial hardship and was not able to meet its liability towards the employer’s contribution – as the returned income itself is at Loss at ₹33,40,690/-; and so the non- payment/delayed payment. Ape’s plea that inadvertently the item was missed-out in the computation – I consider it to have been so, as such items/occurrence are very rare and thus not a regular feature in computation of total income. Coming now to the penalty section 271(1)(c) – the issue is neither concealment of the particulars of income nor is it furnishing of inaccurate particulars of such income. it is not concealment of income – as it had been mentioned in the particulars of the tax audit report; and so neither is there any case for furnishing of inaccurate particulars of income. thus on legal factum too – section 271(1)(c) cannot be applied.”

Ld. DR relied on the order of AO.

Before us Ld. AR submits the said non consideration of certain amount was admitted before AO as it was happened by mistake. The CIT(A) on perusal of tax audit report found that said amount was mentioned in the said tax audit report. Ld. AR argued that it is a bona fide mistake and has no intention to conceal its income. Ld. AR placed reliance on order dated 23.12.2013 of this Tribunal in the case of DCIT vs. M/s SVM Cera Tea Build Ltd. in referred para-9 and argued that said amount was disclosed in the tax audit report there was no concealment of income nor furnishing inaccurate particulars of income. The Co-ordinate Bench of this Tribunal held that assessee’s conduct cannot be said to be contumacious warrantly ACIT CC-1(1) Kol. Vs. M/s Bhaskar Tea & Inds. Ltd. Page 3 levy of penalty. Ld. AR also placed reliance in the case of Price Waterhouse Coopers Pvt. Ltd. and referred to para-19 and argued failure to adding the provision to its total income cannot be considered as assessee is guilty of furnishing inaccurate particulars of income and concealed its income. Ld.AR submits that it was a mistake on behalf of assessee in not considering the employees contribution to its computation of income and reiterates that the facts of present case are similar to the facts of in the above case laws and prayed to uphold the order of CIT(A).

Heard rival submission and perused the material available on record. We find admittedly the said amount of ₹80,56,794/- involving the employees contribution was disclosed in tax audit report as found by the CIT(A) and cancelled the penalty imposed by AO. The facts in the case laws as relied on by Ld. AR are similar to the facts of the present case. The relevant portion in the case of DCIT vs. M/s SVM Cera Tea Build Ltd. supra which has considered the decision of Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd. vs. CIT in Civil Appeal No.6924 of 2012 is reproduced herein below:- “19.The contents o the Tax Audit Report suggest that there is no question of the assessee concealing its cine. There is also no question of the assessee furnishing any inaccurate particulars. It appear to us that all that has happened in the present case is that through a bona fide and inadvertent error, the assessee while submitting its return, failed to add the provision for gratuity to its total income. This can only be described as a human error which we are all prone to make. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. That the assessee should have been careful cannot be doubted, but the absence of due care, in a case such as the present, does not mean that the assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. 20. We are of the opinion, given the peculiar facts of this case, that the imposition of penalty on the assessee is not justified. We are satisfied that the assessee had committed an inadvertent and bona fide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars.”

We find the Tribunal in the afore-mentioned case law placed reliance on the decision of Hon'ble Supreme Court which observed that there was a bona fide and inadvertent error caused while submitting return of income and failure to add the ACIT CC-1(1) Kol. Vs. M/s Bhaskar Tea & Inds. Ltd. Page 4 provision of gratuity to it total income can only be described as human error and which we are all prone to make and holding the assessee guilty of furnishing inaccurate particulars of income or concealed its income is not justified. In our opinion, the facts of the present case is that of afore-mentioned case law are similar. Therefore, order of CIT(A) is justified and we find no infirmity to interfere, thereby ground No.1 and 2 raised by Revenue are dismissed.