Tribunal upholds cancellation of penalty for tax return error by Punjab cooperative society

The Tribunal upheld the CIT(A)'s decision to cancel a penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 on a cooperative society under the Government of Punjab for inadvertently not adding back certain amounts in the income statement. The mistake was deemed a bonafide error made by the society's counsel during tax return preparation, with no intention to conceal income. As the error did not benefit the society and considering its government nature, the Tribunal dismissed the Revenue's appeal, affirming the cancellation of the penalty.

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Issues:
- Penalty imposed under section 271(1)(c) of the Income-tax Act, 1961 for furnishing inaccurate particulars of income.

Analysis:
The judgment pertains to an appeal filed by the Revenue against the order of CIT(A), Chandigarh, canceling a penalty of Rs. 61,13,801 imposed under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 2010-11. The Assessing Officer made additions to the income of the assessee for claiming expenses related to capital gain tax, property tax, and fringe benefit tax in the profit and loss account. The assessee added back the fringe benefit tax amount in the computation of income. The Assessing Officer initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars of income. The assessee contended that the revised computation was filed during assessment proceedings due to technical issues with E-filing and there was no intention to conceal income. However, the Assessing Officer imposed the penalty, which was later canceled by the CIT(A).

On appeal, the CIT(A) observed that the mistake of not adding back the impugned amounts in the statement of income was due to the counsel's error, and it was a bonafide mistake. The appellant, a cooperative society under the Government of Punjab, did not benefit from this error. The CIT(A) allowed the grounds of appeal, canceling the penalty. The Tribunal noted that the assessee engaged a professional for tax return preparation and filing, and the inadvertent mistake was on the part of the counsel. The Tribunal agreed with the CIT(A)'s findings, stating that no one had benefited from the error, considering the nature of the appellant as a government undertaking. Consequently, the Tribunal declined to interfere with the CIT(A)'s order, and the appeal by the Revenue was dismissed. The order was pronounced in open court on 26.10.2015.

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