The Income Tax Appellate Tribunal (ITAT), Pune bench has held that a bonafide and inadvertent mistake ultimately caused an excessive claim of deduction would not attract penalty under section 271(1)(c) of the Income Tax Act, 1961.
The assessee, M/s. Rane Industries Pvt. Ltd, debited to its Profit & loss account – Education cess on TDS amounting to Rs.98,246; Income tax paid of Rs.76,59,480; Penalty on TDS of Rs.16,602; and TDS paid of Rs.52,600. The department initiated penalty proceedings stating that the assessee has claimed excess deduction.
A bench of Shri R.S. Syal, Vice President and Shri ParthaSarathi Chaudhury, Judicial Member has observed that it is apparent from the assessment order itself that the assessee, when pointed out by the AO, admitted its inadvertent mistake in not adding back the above amounts totalling to Rs.78.26 lacs in the computation of total income, which were debited to the Profit & loss account.
“It is clear from the nature of the amounts and the way of their depiction thereof in the Profit & loss account 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 assesseeaccepted the disallowance and paid due tax thereon.It is not a case where the assessee tried to mislead the Revenue by intentionally claiming higher amount of deduction. Rather it is a case of inadvertent mistake in the computation of income,” the Tribunal said.
Citing a catena of decisions, the Tribunal held 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 bona fide mistake committed by the assessee. The Hon’ble jurisdictional High Court in CIT Vs. Somany Evergreen Knits (2013) 352 ITR 592 also deleted the penalty which occurred due to bona fide and inadvertent mistake of the Chartered Accountant while filing the return. Since the facts and circumstances of the instant case amply show that the excess claim of deduction was due to bona fide and unintentional mistake, respectfully following the precedents, we order to delete the penalty.”
Shri M.K. Kulkarni appeared for the assessee.
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