M/S. NATH BROS. EXIM INTERNATIONAL LTD.,NEW DELHI vs. ACIT, NEW DELHI

The assessee company is engaged in the business of manufacturing and Export of readymade garments, garment made- ups and silk fabrics. The issue on which penalty was levied on the assessee u/s 271(1)(c) of the Act is a disallowance by the A.O. of Rs. 2,64,784/-, claimed as deduction u/s 43(B) of the Act by the assessee.

The assessee explained that it was due to a bonafide accounting mistake, the amount in question was claimed both for the assessment year 2006-07, as well as using the current assessment year 2007-08. The Assessing Officer as well as the CIT(A) came to the conclusion that the assessee furnished inaccurate particulars and that the claim in this year was conceded, only after detected by the department. They held, that penalty u/s 271(1)(c) is rightly levied. Aggrieved the assessee is in appeal before us.

We have heard Shri S.K. Sarkar ld. Counsel for the assessee and Shri Raman Kant Garg, the ld. Sr. DR on behalf of the Revenue.

On hearing the rival contentions, I am of the considered opinion that the claim of Rs. 2,64,854/- was due to a human error. The amount was paid, after the end of the financial year 2005-06, but before the due date for filing the return of income for the assessment year 2006-07. This was claimed as deduction during the assessment year 2006-07. The accountant made a mistake of not excluding this amount, from the expenditure recorded in the books for the assessment year 2007-08. Hence, I applying the ratio laid down the Hon’ble Supreme Court in the case of 322 ITR 158 (SC) in the case of Reliance Petro Products and the judgment of the Hon’ble Delhi High Court in the case reported in 328 ITR 44 in the case of CIT Vs. Escorts Finance Ltd. (2010) delete the penalty levied.