Appellate Tribunal affirms deletion of penalty under section 271(1)(c)

The Appellate Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal against the deletion of the penalty under section 271(1)(c). The Tribunal found no merit in the Revenue's contentions and affirmed that the penalty was rightly deleted considering the bonafide nature of the error made by the assessee.

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Issues:
1. Appeal against deletion of penalty under section 271(1)(c) by CIT(A).

Analysis:
The appeal before the Appellate Tribunal ITAT Mumbai pertained to the deletion of a penalty under section 271(1)(c) by the Commissioner of Income Tax (Appeals) (CIT(A)). The Revenue contested the action of the CIT(A) in deleting the penalty of Rs. 13,61,914 levied by the Assessing Officer (AO) against the assessee. The penalty was imposed due to the assessee's withdrawal of a claim for deduction under section 35D related to ROC fees for an increase in authorized share capital. The AO considered this withdrawal as furnishing inaccurate particulars of income, leading to the penalty imposition.

During the proceedings, the assessee explained that the expenses claimed were incurred after the commencement of business operations, and upon realizing the error, the claim was withdrawn. The assessee argued that the claim was not willful but a genuine mistake made during the first year of the company's formation. The assessee also cited a judicial pronouncement by the Supreme Court in a similar case to support their argument.

The CIT(A) accepted the assessee's explanation, deeming it a bonafide error rather than concealment of income or furnishing inaccurate particulars. Relying on the Supreme Court's decision in "Waterhouse Coopers Pvt. Ltd. vs. CIT," the CIT(A) deleted the penalty imposed by the AO. The Appellate Tribunal concurred with the CIT(A)'s findings, stating that the penalty under section 271(1)(c) was unwarranted in this case. The Tribunal upheld the decision of the CIT(A) and dismissed the Revenue's appeal, emphasizing that the error was inadvertent and made in good faith, thus not justifying the penalty.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s order, dismissing the Revenue's appeal against the deletion of the penalty under section 271(1)(c). The Tribunal found no merit in the Revenue's contentions and affirmed that the penalty was rightly deleted considering the bonafide nature of the error made by the assessee.

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