The Pune Bench of the Income Tax Appellate Tribunal (ITAT), headed by R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member), has deleted the penalty on the grounds that the excess claim of deduction was made due to a bona fide and unintentional mistake.
The assessee/appellant debited to its profit & loss account: education cess on TDS; income tax; penalty on TDS; and TDS. The amounts were claimed in the profit and loss account. During the course of assessment proceedings, the assessee was called upon to explain why the amounts were not disallowed and added to the total income.
In response, the assessee admitted the proposed disallowances by submitting that due to an inadvertent mistake, the add back could not be made and even the auditor did not alert the assessee. The AO imposed a penalty under section 271(1)(c) of the Income Tax Act with reference to the disallowances, which was affirmed in the first appeal.
“It is clear from the nature of the amounts and the manner of their depiction in the profit and loss account shows that the assessee inadvertently committed a mistake in not adding back the amount of income tax, etc. paid by it in the computation of total income. On being pointed out, the assessee accepted the disallowance and paid the due tax thereon,” the ITAT said.
The tribunal noted that the Hon’ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012) 348 ITR 306 (SC) has held that no penalty u/s.271(1)(c) can be imposed in respect of inadvertent and bonafide mistake committed by the assessee.
The tribunal held that it was not a case where the assessee tried to mislead the revenue by intentionally claiming a higher amount of deduction. Rather, it is a case of an inadvertent mistake in the computation of income.
Case Title: M/s. Rane Industries Pvt. Ltd. Versus DCIT
Source: livelaw.in
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