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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI D.T. GARASIA & SHRI G. MANJUNATHA
Per D.T. GARASIA, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 31.10.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11.
The short facts of the case are that the assessee is an individual and had filed return of income on 01.11.2011 showing total income of Rs.9,54,130/-. During assessment proceedings, the Assessing Officer (hereinafter referred to as the AO) noted that the assessee
2 Ms. Archana Shantilal Jain worked for two employers during the year and had received salary from two employers. The assessee had received salary income of Rs.11,20,322/- from M/s. Amdocs Development Centre of India which was shown in the return but the salary received from M/s. Satyam Computer amounting to Rs.16,32,697/- was not shown in the return. When asked to explain, the Authorised Representative accepted the mistake and offered the salary received from M/s. Satyam Computer to tax during assessment proceedings. Accordingly, an amount of Rs.16,32,697/- was added to the total income returned and penalty proceedings initiated u/s.271(1)(c). In reply to show cause notice for penalty, the Authorised Representative claimed that it was a bonafide and inadvertent error by the assessee by not offering the salary income from one of the employers, in view of the Bombay High Court decision in the case of CIT Vs. Somany Evergreen Knits Ltd., it was claimed that penalty for technical or venial breach should not be levied. The explanation did not find favour with the Assessing Officer who held that salary of Rs.16,32,697/- received by the assessee from M/s. Satyam Computer, was not a small amount and not showing this in the return cannot be considered as a bonafide error. The case law did not apply to the facts of the case. The assessee did not voluntarily offer this income and did not produce any valid explanation for not showing this income in the return. The assessment order passed u/s.143(3) has been accepted and no appeal filed against the same. The Assessing Officer, therefore, held that the assessee has committed a default rendering herself liable for penalty u/s.271(l)(c) specially in view of
Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has dismissed the appeal of the assessee.
The Ld. A.R. submitted that assessee has changed the employment during the year and filed the return of income for A.Y. 2010-11 without taking into consideration the salary of first employer Mr. Satyam Computer. This was due to the apparent mistake made by the tax consultant of the assessee. This is evident from the affidavit filed before the AO by the tax consultant accepting his mistake in preparing and filing the return. The full tax was deducted by both the employers and thus there was no intention to conceal the particulars of income by the assessee or to evade the tax. The tax liability was only due to the fact that both employers have given their slab rate benefit. The assessee had admitted this mistake suo moto and filed the revised working during the assessment proceeding and paid the taxes due. The Ld. A.R. submitted that assessee had no intention to evade the tax. Therefore, as per the decision of Mumbai Tribunal in the case of Richa Dubey vs. ITO in reported in (2016) 158 ITD 541 wherein it is held that if the assessee itself makes any attempt to file incorrect income and makes an attempt to claim refund from revenue, except in assessment year under appeal, which errors had also been duly explained by the assessee by furnishing bona-fide explanation.
On the other hand, the Ld. D.R. relied upon the order of Hon’ble Bombay High Court in the case of Samson Maritime Ltd. vs. CIT in of 2014.
We have heard the rival contentions of both the parties. Looking into the facts and circumstances of the case, we find that issue in controversy is covered by the decision of Hon’ble Bombay High Court in the case of CIT vs. Somany Evergree Knits Ltd. (2013) 352 ITR 592 wherein it is held that when there is a bonafide mistake in filing a return of income by CA, then return of income will not amount to furnishing of inaccurate particulars of income. We find that in this case the assessee has not taken into consideration the income of salary from the first employer M/s. Satyam Computer and this mistake was made by the tax consultant of the assessee. The affidavit was filed by the tax consultant that he has made mistake while preparing the return of income and when the tax consultant has accepted this mistake no penalty can be levied. The assessee has admitted the mistake and revised the working during the assessment proceeding and it was accepted by the department. Therefore, in view of the decision of Hon’ble Jurisdictional Bombay High Court in the case of CIT vs. Somany Evergree Knits Ltd. (supra) wherein the High Court has held as under: “Penalty u/s 271(1) (c) —Furnishing of inaccurate particulars —Bona fide mistake - Assessee sold its garment manufacturing machine, forming part of block of assets & claimed loss thereon as revenue expenditure-In assessment proceedings
5 Ms. Archana Shantilal Jain assessee realized its mistake & withdrew loss from P&L account-Further, assessee had also claimed excess depreciation—This happened due to mistake in calculation i.e. instead of reducing amount of depreciation on asset sold, from total depreciation, such amount was added resulting in excess claim—AO did not accept both mistakes & levied penalty—CIT (A) upheld order —Held, bonafide and inadvertent mistake of a CA while filing a return of income will not amount to furnishing of inaccurate particulars of income—As far as loss on sale of machineries was concerned, P&L Account filed by assessee along with return clearly described loss as loss on sale of garment unit assets—It was this loss which was added to net loss as per P&L Account in computation of total income— Chartered Accountant of assessee did not advise assessee as to correct legal position & return was filed on above lines—When this was pointed out in course of assessment proceedings assessee accepted addition made by AO— It was held that fixed assets of garment division clearly showed that assets sold were depreciable assets, thus there was enough evidence available in documents filed along with return to show that claim made by assessee were not in accordance with law—Thus, plea of assessee that claim for deduction was made on account of a bonafide mistake had to be accepted—It was held that when all facts were available on record it cannot be said that assessee attempted to furnish inaccurate particulars of income particulars—With regard to excess depreciation, it was held that it was clearly a mistake on part of CA of Assessee— When assets comprised in block of assets were sold sale value of assets sold had to be reduced from block of assets and no other adjustment was required—In contrary, assessee worked out excess depreciation on assets of garment unit sold during PY—It was clearly a case of incorrect claim—It was held that bonafide act of assessee was established from facts that assessee accepted mistake and did not prefer any appeal against order of AO— Non—furnishing of revised return did not mean that bonafide mistake in making a wrong claim should be visited with imposition of penalty—Moreover, time for filing a revised return had already been expired—Penalty imposed cancelled.
Respectfully following the same, we are of the view that no penalty can be imposed. Hence, we delete the same.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 13.10.2017.