ARCHANA SHANTILAL JAIN,PUNE vs. DCIT 26(2), MUMBAI

Per D.T. GARASIA, Judicial Member:

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

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.

Order pronounced in the open court on 13.10.2017.