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Income Tax Appellate Tribunal, “ F” BENCH, MUMBAI
स्थधमी रेखध सं./जीआइआय सं./PAN. :AAACF8196P अऩीरधथी ओय से / Appellant by Shri Vimal Punmiya प्रत्मथी की ओय से/Respondent by Shri A K Dhondial सुनवधई की तधयीख / Date of Hearing : 19.11.2015 घोषणध की तधयीख /Date of Pronouncement: 19.11.2015 आदेश / O R D E R
Per B R Baskaran, AM:
The appeal filed by the assessee is directed against the order dated 18.7.2013 passed by the ld. CIT(A)-4, Mumbai confirming the penalty levied by the AO u/s 271(1)(c) of the Income Tax Act, 1961.
The facts relating to the issue are stated in brief. The assessee is engaged in the business of providing financial and advisory services. It filed its return of income for the year under consideration declaring the Short Term Capital Gain (STCG) of Rs.512.78 lakhs arising on sale of shares and income from the business of Rs.31.31 lakhs. Thus, the total income declared by the assessee was Rs.544.09 lakhs. However, while computing the tax payable on the total income, the assessee applied concessional rate of tax on STCG as per the provision of section 111A of the Act. It is pertinent to note that the concessional rate of tax under section 111A on STCG arising on sale of shares shall be applicable only if the transactions had suffered Security Transaction Tax. At the time of assessment proceedings, it was noticed by the AO that the shares sold by the assessee did not suffer security transaction tax and hence, the concessional rate provided u/s 111A of the Act is not applicable to the STCG declared by the assessee. When it was pointed out, the assessee immediately agreed to pay tax as per the normal rate of tax. Accordingly, the AO determined the total income at Rs.544.09 lakhs, i.e., at the same level of return income and levied tax at the normal rate. The AO initiated penalty proceedings under section 271(1)(c) of the Act. Though the assessee submitted that it did not concealed any particulars of income or furnished any inaccurate particulars of income, the AO was not satisfied with the same and accordingly levied penalty of Rs.76.91 u/s 271(1)(c) of the Act. The ld. CIT(A) also confirmed the same and hence the assessee has filed this appeal before us.
We heard the parties and perused the record. The ld. AR submitted that the question of concealment of particulars of income or furnishing in accurate particulars of income does not arise in this case since the income returned by the assessee and income assessed by the AO is one and same. He submitted that the assessee has furnished all the material facts relevant to the computation of income and the mistake occurred in the computation of tax by oversight while filing the return of income. He further submitted that assessee has furnished all the details relating to STCG arising on sale of shares in the return of income. He further submitted that the assessee has offered proper explanations before the AO during the course of penalty proceedings and explained all the details. Accordingly, he submitted that the assessee cannot be considered to have concealed particulars of income or furnished inaccurate particulars of income. He submitted that the penalty levied on identical reasoning has been deleted by the Co-ordinate Bench of the Tribunal in the following cases: a) Asia Attractive Dividend Stock Fund Mother Fund V/s Dy.Director of Income Tax (International Transaction) in (AY-2008-09); b) ACIT V/s Smt.Cecilia Haresh Chaganlal (2015) 58 taxmann.com 312 (Mum-Trib). He further submitted that the decision rendered by the Tribunal in the case of Asia Attractive Dividend Stock Fund Mother Fund (supra) has since been approved by the Hon’ble Bombay High Court in its decision reported in (2013) 35 taxmann.com 265 (Bom). He further submitted that the facts that the assessee did not pay security transaction tax has been voluntary disclosed by the assessee which shows that it was by bonafide mistake, the tax was computed at concessional rate. He further submitted that the details furnished by the assessee with regard to the STCG was not found to be factually incorrect and hence, incorrect claim in law on computation of tax will not lead to levy of penalty u/s 271(1)(c) as held by the Hon’ble Supreme Court in the case of CIT vs. Reliance Petroproducts (2010) 322 ITR 158 (SC).
On the contrary, the ld. DR submitted that the assessee has furnished inaccurate particulars of income by computing tax at concessional rate u/s 111A of the Act even though the assessee is not entitled for concessional rate of tax on the STCG arising on sale of shares. Accordingly, he submitted that the ld. CIT(A) was justified in confirming the penalty levied by the AO.
We have heard the rival contentions and perused the record. We notice that the ld. CIT(A) has taken the view that the assessee has declared a total income at Rs.31.31 lakhs only in the return of income and the AO has assessed the same at Rs.544.09 lakhs. A perusal of paper book filed by the assessee would show that the said observation made by the ld. CIT(A) is not in accordance with the facts available on record. The income of Rs.31.31 lakhs pertains to business income declared by the assessee and the assessee has also declared STCG arising on sale of shares and the aggregate amount of both the incomes have been declared in the return of income filed by the assessee and the same income has also been assessed by the assessing officer. Hence as submitted by the ld. AR there is no difference between the income returned by the assessee and the income assessed by the AO. Thus, we notice that the Ld CIT(A) has proceeded to adjudicate the issue on incorrect appreciation of facts.
The mistake has occurred only in the computation of tax payable on the total income and not in arriving at the total income. While the assessee has computed the tax payable on STCG at concessional rate prescribed u/s 111A of the Act, the AO has computed the tax at the normal rate since the assessee is not entitled to concessional rate of tax on the STCG arising on sale of shares. Since the said shares did not offered security transaction tax.
We notice that the assessee has offered explanations before the assessing officer in the penalty proceedings by stating that the calculation error has been committed by the clerk feeding the data. However, the assessee has furnished all the proofs, documents and details relating to the STCG which are material to the computation of total income. Accordingly, it appears that the assessee sought protection as per the Explanation 1 given under sec. 271(1)(c) of the Act. In effect, the assessee’s contention is that there is no concealment of particulars of income or there is no furnishing of inaccurate particulars of income and there was a bonafide mistake in working out the tax payable by it. However, the AO has taken the view that the assessee has taken a chance by computing tax at a lower rate and the same was unearthed as a result of scrutiny assessment. Further the assessee did not correct the mistake by filing revised return of income suo moto. Accordingly, the AO held that it was a fit case for levying penalty u/s 271(1)(c) of the Act. It is pertinent to note that the assessing officer did not state, neither in the assessment order nor in the penalty order, about the nature of default, i.e., whether it is a case of concealment of particulars of income or furnishing of inaccurate particulars of income.
In the case of Smt.Cecilia Haresh Chaganlal(supra) relied upon by 8. the assessee, the Tribunal considered the issue relating to levy of penalty on levied on short computation of tax payable by the assessee. In the above said case, the assessee had offered long term capital gains (LTCG) on sale of paintings. In the original return of income, the assessee computed tax on LTCG at normal rate of 20%. Subsequently, she filed a revised return of income by computing tax at concessional rate of 10%. During the pendency of assessment proceedings, the assessee filed another revised return and again computed tax at normal rate of 20%. The AO did not consider the second revised return of income and levied penalty for short computation of tax. While adjudicating the issue, the co- ordinate bench first considered the question as to whether offering the tax at a concessional rate applicable to a different category of income would amount to furnishing of inaccurate particulars of income attracting the provisions of sec. 271(1)(c) of the Act. The relevant discussions made by the Tribunal are extracted below:-
“7. We have considered the rival submissions as well as relevant material on record. The question arises for our consideration and adjudication is whether offering the tax at a concessional rate applicable on a different category of income would amount to furnishing inaccurate particulars of income attracting the provisions of section 271(1)(c). The facts in the case of the assessee are not in dispute as the assessee filed its original return of income on 31.07.2009 and offered the Long Term Capital Gain on sale of paintings to tax at the normal rate of 20% as applicable on such Long Term Capital Gain. Subsequently, the assessee has filed a revised return on 8.09.2009 and offered the tax at a concessional rate of 10% under the proviso to section 112(1) of the Income Tax Act. It is pertinent to note that the concessional rate of tax @ 10% as per second proviso to section 112(1) read with second proviso to section 48 is applicable on the Long Term Capital Gain arising from sale of Securities, listed Bonds, shares etc., if the assessee while computing such Long Term Capital Gain has not taken the benefit of indexed cost. Therefore, as per the provisions of section 112(1) of the Income Tax Act, an option is available to the assessee in respect of the Long Term Capital Gain arising from sale of such Listed shares, Bonds, securities etc., either to take the benefit of indexed cost or apply concessional rate of tax at 10% whichever is beneficial to the assessee. Therefore, there is no ambiguity or scope of any misunderstanding about the applicability of section 112 of the Income Tax Act only on the Long Term Capital Gain arising from sale of such Listed Shares, Securities, Bonds etc. In the case in hand, the Long Term Capital Gain arose on sale of paintings, therefore, the income from Long Term Capital Gain from sale of paintings is not allowable for concessional rate of tax as per the proviso to section 112(1) of the Income Tax Act. The assessee has also filed a second revised return of income on 11.7.2011, in which the assessee offered the Long Term Capital Gain to tax at the rate of 20% as it was offered in the original return of income, though the said return of income was treated as invalid being barred by limitation. The Penalty proceedings have been initiated by the AO based on the first revised return filed by the assessee wherein the concessional rate of tax was claimed on the Long Term Capital Gain. The amount of Long Term Capital Gain remains same in all the three return of income filed by the assessee and the only change and difference in the original return of income and first revised return of income is the rate of tax applied by the assessee. Though, by applying concessional rate of tax at 10% on the ground that the assessee has not taken the benefit of indexed cost for computation of Long Term Capital Gain would help the assessee if in the return of income, the assessee has given the impression that the Long Term Capital Gain in question is arising from the transfer of listed shares, bonds, securities etc., however, in the return of income the assessee has specifically and categorically mentioned the capital gain arising from the sale of paintings. The source of income has been explained by the assessee in all the return of income which remains same and, therefore, there is no change in the source of income and the category of income which is specified as capital gain from sale of paintings then even if the assessee has applied incorrect rate of tax in the revised return, it would not constitute that the assessee has changed the class/nature of income eligible for concessional tax u/s 112(1) of the Income Tax Act. When there is no attempt on the part of the assessee to show the Long Term Capital Gain in a different category then merely because a concessional rate of tax was applied in the revised return does not ifso facto lead to the conclusion that the assessee has concealed the particulars of income. Even otherwise, all these facts and circumstances supports the explanation of the assessee that the concessional rate of tax on Long Term Capital Gain was applied on the basis of the advice of the Chartered Accountant, therefore, it was a bona fide mistake. This explanation, in our view is quite reasonable as per the Explanation 1B of section 271(1) of the Income Tax Act particularly in view of the fact that the assessee did not claim the benefit of indexed cost while computing the Capital Gain in question. This is not a case that the Long Term Capital Gain in question is not eligible for benefit of indexed cost. The claim of concessional tax applied on the Long Term Capital Gain, though, is against the provisions of Income Tax Act, however, it is based on the fact that the benefit of indexed cost was available to the Capital Gain in question which was not claimed by the assessee. In view of the above facts and circumstances of the case, we do not find any error or illegality in the impugned order of CIT(A) in deleting the penalty by following the Judgment of Hon’ble High Court in the case of Price Watercoopers (Supra)” Thus, it can noticed that the co-ordinate bench of Tribunal has expressed the view that mere application of concessional rate of tax would not ipso facto lead to the conclusion that the assessee has concealed the particulars of income.
In the case of Asia Attractive Dividend Stock Fund (supra) relied 9. upon by the assessee, the co-ordinate bench of Tribunal has considered an identical issue. The assessee in the above said case also worked out the tax payable on Short term capital gain at concessional rate u/s 111A of the Act, whereas it was liable to pay tax on STCG under normal rate. During the course of assessment proceedings, the assessee accepted the said fact and submitted that it was a bonafide clerical error. The assessee had also paid higher advance tax and the same was taken in support of the claim of bonafide mistake. The co-ordinate bench of Tribunal cancelled the penalty with the following observations:- “12. Assessing officer initiated penalty proceedings under section 271(1)(c) on the ground of furnishing inaccurate particulars of income and claiming wrong refund in the return filed. Assessee filed its reply vide letter dated 27.1.2011, copy placed at pages 71 to 78 of PB. On Perusal of said reply, we observe that assessee stated that there was a clerical error in the computation of tax liability, which was discovered while preparing for appearance for scrutiny assessment pursuant to notice u/s.142(1) dated 20.10.2010 and as soon as error was discovered, it was suo moto brought to the notice of AO vide first written submission filed on 23.11.2010. Assessee stated that it was not the intention of the assessee to defraud the revenue. We also observe that the returned income was accepted while finalizing the assessment and the AO considered the revised computation of income and tax payable working filed by assessee vide its letter dated 23.11.2010. Considering the facts, we find merit in the submission of assessee that there was a bonafide clerical error in the computation of tax liability while filing the return in regard to chargeability of tax rate which was rectified during the course of assessment proceedings and, accordingly, no refund as claimed by the assessee in the return filed was processed by the department. The Hon'ble Supreme Court in the case of Reliance Petro Products (P) Ltd (supra) has held that if all the facts relating to claim are disclosed and the information given in the return is not found incorrect or inaccurate, assessee cannot be held guilty of furnishing inaccurate particulars of income. Their Lordships also held that mere making of a claim which is not sustainable in law by itself, will not amount to furnishing inaccurate particulars regarding income of the assessee and such claim made in the return cannot amount to furnishing inaccurate particulars. 12.1 In the case before us, we observe that assessee placed all the facts relating to its income in the return filed and also furnished requisite information in the return in respect of its income. AO has initiated penalty proceedings for the reason that while calculating liability of tax, assessee applied rate of tax @ 10% instead of rate of tax @ 30% as applicable, as assessee had not, admittedly, paid STT on the share transactions. AO has not disputed that total capital gain as disclosed by the assessee was found to be correct and assessed. We are of the considered view that such a mistake to state lower rate of tax applicable in the return of income cannot constitute furnishing inaccurate particulars of income particularly when assessee has furnished all the relevant materials in the return filed. The Hon'ble Kolkata High Court in the case of Udayan Mukherjee(supra)(291 ITR 318) held that if a mistake is committed in working out indexation, the mistaken indexation would not amount to furnishing of wrong particulars within the purview of section 271(1)(c) of the Act as the same can be corrected by the AO on the basis of particulars furnished. In the case before us also, AO could apply the chargeable rate of tax as applicable to the transaction on the basis of information furnished by the assessee and, therefore, the mistake committed by the assessee to apply lower rate of tax on the disclosed income cannot amount to furnishing inaccurate particulars nor concealment of income and same does not come within the purview of section 271(1)(c) of the Act. The ITAT Mumbai in the case of Hindalco Industries Ltd vs ACIT, 41 SOT 254(Mum) held that when assessee furnished full details and particulars of its income and assessee was under bonafide belief regarding allowability of short term capital loss on sale of securities in terms of provisions of section 94(7), the levy of penalty under section 271(1)(c) was not justified. The ITAT Mumbai in the case of Walter Saldhana Assessment Year: 2008-09 vs DCIT, 44 SOT 26 (Mum) held that if the AO had made addition only on the basis of material and information furnished by the assessee, levy of penalty under section 271(1)(c) is not justified. In this regard, we consider it prudent to reproduce para 16 of the said case, which reads as under: "16. ... On perusal of the orders of revenue authorities, we find that the penalty under section 271(1)(c) was levied on the ground that the assessee violated of provisions of section 94(7) of the Act by not ignoring losses while computing short- term capital gains on transactions related to section 94(7) of the Act. It is important to state here that the Assessing Officer made the addition only on the basis of material and in formations furnished by the assessee. The Apex Court in the case of Reliance Petroproducts (P.) Ltd. (supra) regarding the word 'particulars' used in section 271(1)(c) has held that there can be no dispute that everything would depend upon the Return filed because that is the only document, where the assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. But in the case under consideration we find that the assessee has furnished full detail and has not concealed any particulars of income or has furnished any inaccurate particular of income. Further, we noticed that there were no such specific requirements in the return form applicable to the year under consideration. Such requirement of the column in the return has been inserted by amendment in return form, ITR-6, at page 17, "Schedule CG capital gain" S. N. 3(d) which is applicable from assessment year 200 7-08. In the case of Reliance Petro products Ltd. (supra) the Hon'ble Supreme Court held that where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c). A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. The case of the assessec under consideration is squarely covered by the above judgment of the Apex Court. The assessee demonstrated that their claim was bona fide claim. In the light of above discussion, we don't find that the case under consideration is a fit case for levy penalty under section 271(1)(c) of the Act we therefore cancelled the penalty levied."
13. The Hon'ble Apex Court in the case of Reliance Petroproducts Pvt Ltd. (supra)(322 ITR 158) held that there can be no dispute that everything would depend upon the return filed because that is the only document, where assessee can furnish the particulars of his income. When such particulars are found to be inaccurate, the liability would arise. But in the case when it was found that assessee had furnished full details and had not concealed any particulars of income and where there is no finding that any details supplied by the assessee in his return of income are found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c) of the Act. It was also held that a mere making of a claim, which was not sustainable in law, by itself, would not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars. Not only this, we observe that Hon'ble Jurisdictional High Court in Income Tax Appeal No.3899/M/2010 (CIT VS. Aditya Birla Nova Limited) vide order dated 14th August, 2012, after considering the decision of the Hon'ble Apex Court in the case of Union of India & Ors. Vs. Dharamendra Textile Processors & Ors, 306 ITR 277(SC) and the decision of CIT Vs. Reliance Petroproducts Pvt. Ltd. (supra), has held that the levy of penalty even where a claim for deduction is not upheld, even though the assessee has disclosed all material facts and has not suppressed any material facts, the levy of penalty is not justified. In the said case, the assessee claimed deduction of Rs. 9,94,399/- on account of diminution in the value of shares held by it. The same were disallowed on the ground that the shares were held as investments, and profits and losses on the sale thereof were to be considered under the head "capital gains". Therefore, the quantum proceeding was concluded against the assessee. The Assessing Officer levied penalty under Section 271(1)(c) of the Act. The Hon'ble jurisdictional High Court held that it was not the case of the department that the assessee withheld any information or furnished any false information. The facts necessary for carrying out the assessment proceedings were admittedly disclosed in the return filed by the assessee. It was held that the assessee had wrongly claimed deduction and it was not entitled to the same as it is a pure question of law. In that context, the Hon'ble jurisdictional High Court held that by making an incorrect claim in law cannot tantamount to furnishing inaccurate particulars. Simply in the case before us, assessee furnished all the requisite details in the return save and except wrongly applied charging of rate of tax on short term capital gains disclosed by the assessee. Therefore, we are of the considered view that applying wrong rate of tax at which short term capital gains disclosed by the assessee does not amount to furnishing inaccurate particulars of income and that too when assessee rectified the said mistake suo moto before assessment proceedings were completed and stated that said mistake had occurred inadvertently while computing the income. Not only this, the Hon'ble Apex Court by its order dated 25.9.2012 in Civil Appeal No.6924/2012(arising out of S.L.P.(C) No.10700 of 2009) in the case of Price Waterhouse Coopers Pvt Ltd. vs. CIT, has held that when there is a bonafide and inadvertent error to add the provision for gratuity to its total income while submitting its return, this can only be described as a human error which we are all prone to make. In the said case, the regular assessment was completed under section 143(3) of the Act. Subsequently, reassessment proceedings were initiated on the ground that assessee made provision of Rs.23,70,306 for payment of gratuity. AO stated that in the reasons
recorded that the provisions is not allowable under section 40A(7) of the Act and was required to be added back. Soon after the assessee was communicated the said reasons for reopening the assessment, assessee stated that it realized the mistake and, accordingly, by a letter dated 20.1.2005 informed the AO that there was no willful suppression of facts by the assessee but that a genuine mistake or omission had been committed which also appears to have been overlooked by the AO while making regular Assessment Year: 2008- 09 assessment. Accordingly, assessee filed revised return on the same date and reassessment was passed and assessee then paid the tax due as well as the interest thereon. In view of above, AO also initiated penalty proceedings under section 271(1)(c) and saddled the assessee with penalty at 300% on the tax sought to be evaded by the assessee by furnishing inaccurate particulars. Ld CIT(A) upheld the imposition of penalty. On appeal, the Tribunal upheld the levy of penalty but reduced the same to 100%. Assessee approached the Hon'ble High Court, which also dismissed the appeal. Hence, assessee filed appeal before the Hon'ble Supreme Court. The Supreme Court after hearing ld counsel for the parties observed that assessee is undoubtedly a reputed firm and has great expertise available with it. Notwithstanding this, it is possible that even the assessee could make a "silly" mistake and indeed this has been acknowledged both by the Tribunal as well as by Hon'ble High Court. The Hon'ble Apex Court held that the contents of the tax audit report suggest that there is no question of the assessee concealing its income, when assessee filed tax audit report alongwith the return which was unequivocally for provision of payment was not allowable under section 40A(7) of the Act but still assessee made computation of the assessee in its return of income. The Hon'ble Apex Court held that all that has happened is that through a bonafide and inadvertent error by the assessee while submitting his return and failed to add provision of gratuity to its total income. The caliber and expertise of the assessee has little or nothing to do with the inadvertent error. The Apex Court also stated that 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 assessee is guilty of either furnishing inaccurate particulars or attempting to conceal its income. The Apex Court held that on the facts of the case, the imposition of penalty Assessment Year: 2008- 09 under section 271(1)(c) of the Act on the assessee is not justified. The assessee had committed an inadvertent and bonafide error and had not intended to or attempted to either conceal its income or furnish inaccurate particulars. Considering above case and facts of the case before us, we are of the considered view that above decision of Hon'ble Apex Court squarely applies to the facts of the case. Therefore, we hold that assessee has committed an inadvertent error in the return of income to charge the tax @ 10% instead of applicable rate of tax @ 30% on short term capital gains shown by the assessee as assessee has not paid STT on share transactions. Hence, assessee has not concealed its income or furnished wrong particulars of facts. Accordingly, provisions of section 271(1)(c) of the Act on the facts and in the circumstances of the case, are not applicable. In view of above facts, we delete the penalty levied by authorities below by allowing ground of appeal taken by assessee.”
10. In the above said case, the Tribunal, by following the decision rendered by the Hon’ble Kolkatta High Court in the case of Udayan Mukherjee (supra), has expressed the view that the mistake committed by the assessee to apply lower rate of tax on the disclosed income cannot amount to furnishing of inaccurate particulars of income nor concealment of income and the same does not come within the purview of sec. 271(1)(c) of the Act. Further the Tribunal has also followed the decision rendered by Hon’ble Apex Court in the case of Reliance petroproducts Pvt Ltd (supra) and held that the question of furnishing of inaccurate particulars of income does not arise, when the assessee has furnished all the details in its return of income. The Hon’ble Bombay High Court has also upheld the order of the Tribunal by holding that the order of the Tribunal is based on finding of fact. The facts prevailing in the instant case are almost identical in nature. The assessee has furnished all the details relating to STCG in the return of income. However, the mistake has occurred only in the computation of tax.
During the course of assessment proceedings, the AO called for various details through the notice issued u/s 142(1) of the Act. The assessee furnished its reply through its letter dated 18-10-2011, wherein the assessee, inter alia, furnished the details of STCG. A copy of the reply is attached in the paper book filed by the assessee. A perusal of the same would show that the assessee has furnished the details of STCG by segregating the STCG into two categories, viz., (a) STCG on which STT was not paid and (b) STCG on which STT was paid. Thus it is noticed that the assessee has furnished all the relevant details relating to STCG and the same shows that there was no malafide intention on the part of the assessee to pay tax at a reduced amount, as presumed by the assessing officer. During the course of assessment proceedings itself, the assessee filed another letter dated 15.11.2011 accepting its mistake and requested the assessee to raise demand by computing correct tax.
In the explanations furnished by the assessee during the course of penalty proceedings, the assessee has explained that the mistake was committed by a clerk while computing the tax. The various letters furnished before the AO during the course of assessment proceedings, in our considered view, support the explanations of the assessee that it was a bonafide mistake. The Hon’ble Supreme court in the case of Price waterhouse coopers (P) Ltd (348 ITR 306) has held that the bonafide mistakes would not lead to concealment of income.
The co-ordinate bench of Tribunal has considered the validity of levying penalty on the bonafide mistakes committed by the assessees in the case of M/s Precision Electrical Wiring System P Ltd Vs. ITO (ITA No.2349/Mum/2009 dated 19-01-2011. The above said assessee claimed deduction u/s 80IB of the Act for AY 2005-06, even though its eligibility to claim the said deduction had expired in the immediately preceding year. When the said mistake was pointed out by the AO, the assessee readily accepted its mistake and agreed for disallowance of the claim. The assessing officer levied penalty u/s 271(1)(c) of the Act. The Tribunal deleted the penalty by following the decisions rendered by Hon’ble Punjab & Haryana High Court in the following cases:-
(a) Sidhdharth Enterprises (322 ITR 80)(P & H) (b) Arisudana Spinning Mills Ltd (326 ITR 429)(P&H) In the case of Sidhdharth Enterprises (supra), the Tribunal had deleted the penalty by holding that the furnishing of inaccurate particulars of income was a silly mistake and not a deliberate attempt to evade tax. The High Court held that the view taken by the Tribunal could not be held to be perverse.
In view of the foregoing discussions, we are of the view that the assessee has committed a bonafide mistake in computation of tax on the STCG. Further, there is no allegation that the assessee has concealed any particulars of income or furnished inaccurate particulars of income relating to STCG. The assessee has explained that the mistake was committed by the clerk who has fed the data into the computer for preparing the return of income. The assessee has voluntarily submitted the details of STCG to the AO by duly bifurcating the STCG into (a) the STCG which suffered Security Transaction Tax (STT) and (b) which did not suffer the STT. The details to submitted by the assessee proves the bonafides of the assessee and the same supports the explanation of the assessee. Further, the assessee has also written another letter duly accepting the mistake and has also requested the assessing officer to raise the tax demand. The foremost important point is that the income returned by the assessee has been accepted by the assessing officer as it is, without making any adjustment. Hence, in view of the judgments referred above, the mistake committed in computation of tax cannot be considered to be a case of concealment of particulars of income or furnishing of inaccurate particulars of income. Even if it is considered for a moment to be a case of furnishing of inaccurate particulars of income, the same has been caused due to a clerical mistake committed by the clerk who fed the details into the computer and hence the decision rendered by the Hon’ble Supreme court in the case of Price waterhouse coopers (P) Ltd (supra) supports the case of the assessee.
Accordingly, we are of the view that the facts and circumstances of the case does not warrant levy of penalty u/s 271(1)(c) of the Act. Accordingly, we set aside the order of Ld CIT(A) and direct the AO to delete the impugned penalty.
The Ld A.R has taken alternative contention that the assessee has voluntarily agreed to the correction and hence such agreed addition does not warrant penalty. We do not find it necessary to adjudicate the same, in view of our decision rendered supra.