The Delhi Bench of the Income Tax Appellate Tribunal (ITAT)held that penalty under section 271(1)(c) is not leviable on a bonafide mistake.
Central News Agency Pvt Ltd, the assessee’s total income/loss was determined at (48,71,176)/-; as against the returned loss of Rs.50,39,439/- by the assessment order where the addition of Rs.1,68,263/- was made on account of personal expenses of the Directors.
The assessee accepted the aforesaid addition of Rs.1,68,263/- and did not appeal against the assessment order. Subsequently, order u/s 271(1)(c) of the Income Tax Act was passed by the Assessing Officer on 27/06/2019 levying a penalty amounting to Rs.51,993/- in respect of the aforesaid addition of Rs.1,68,463/-. On appeal, CIT(A) confirmed the penalty.
Sh. Ranjan Chopra, Counsel for the assessee stated that the assessee made a computational error in its return on income, but the error was bonafide/inadvertent and further stated that it was a human error without any intention to furnish inaccurate particulars or to conceal income.
The assessee contended that the revised computation of income offering the aforesaid amount Rs.1,68,263/- in addition, was filed during the assessment proceedings before the Assessing Officer as soon as the bonafide and inadvertent mistake came to the knowledge. Sh. R. S. Yadav, Senior Departmental Representative relied upon the orders of the Ld. CIT(A) and Assessing Officer.
A Coram of Shri Chandra Mohan Garg, JM and Shri Anadee Nath Misshra, AM noticed that the aforesaid amount of Rs.1,68,263/- was added based on ad hoc estimation of personal use of the car by the Directors of the company. It was observed that the assessee made a computational error in not disallowing 1/6th out of expenses on car amounting to aforesaid Rs.1,63,263/- being 1/6th out of motor car expenses.
It was viewed that the computational error was due to oversight and an inadvertent mistake made due to oversight did not amount to furnishing inaccurate particulars of income, or concealment of income.
The Bench while allowing the appeal set aside the impugned appellate order dated 30/07/2020 of the CIT(A) and cancel the aforesaid penalty amounting to Rs.51,993/- levied by the Assessing Officer.
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