Tribunal overturns penalty for genuine error in book profit calculation

The Tribunal ruled in favor of the appellant, holding that the omission of long term capital gain in the book profit calculation was a computational error based on a genuine belief, not an intentional act to provide inaccurate particulars of income. The penalty under section 271(1)(c) was deemed unjustified and subsequently deleted. The appellant's appeal was allowed, and the decision was announced in open court on 03.11.2017.

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Issues:
Penalty under section 271(1)(c) for furnishing inaccurate particulars of income by not including long term capital gain in book profit calculation under section 115JB.

Detailed Analysis:
1. The appellant, a company, filed its return of income for A.Y. 2010-11 declaring Nil income but claimed exemption of long term capital gain under section 10(38) of the Income Tax Act, 1961 while computing income under normal provisions and book profit under section 115JB. The Assessing Officer, finding the exclusion incorrect, initiated penalty proceedings under section 271(1)(c) for inaccurate particulars of income.

2. The appellant argued that the non-inclusion was a bona fide error as the long term capital gain was exempt under section 10(38), and all relevant details were disclosed. The appellant cited various legal precedents to support the contention that penalty imposition was unwarranted due to inadvertent omission.

3. The Departmental Representative contended that the appellant's claim was incorrect, and even after being notified by the Assessing Officer, the appellant did not rectify the error, leading to the conclusion of inaccurate particulars of income.

4. The Tribunal analyzed the case, acknowledging the appellant's disclosure of all relevant details in the return of income and the Assessing Officer's awareness of the long term capital gain from the submitted documents. The Tribunal noted that the exclusion was due to a bona fide belief in the exemption's applicability to book profit calculation, considering the legal provisions.

5. Ultimately, the Tribunal held that the appellant's omission was a computational error based on a genuine belief, not a deliberate attempt to furnish inaccurate particulars of income. Relying on legal precedents and distinguishing the cited case law, the Tribunal concluded that the penalty under section 271(1)(c) was unjustified and deleted it.

6. Consequently, the Tribunal allowed the appellant's appeal, stating the order in open court on 03.11.2017, thereby ruling in favor of the appellant against the penalty imposed for not including long term capital gain in the book profit calculation under section 115JB.

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