Appeal granted, penalty deleted for inadvertent income computation error. Legal precedents and prompt rectification considered.

The Tribunal allowed the appeal, emphasizing that the penalty under section 271(1)(c) for inadvertent mistake in income computation was deleted. The decision was based on legal precedents and the unintentional nature of the error, with the assessee acknowledging and rectifying the mistake promptly. The excess claim of deduction was deemed a bona fide mistake, leading to the deletion of the penalty.

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Issues:
Penalty under section 271(1)(c) of the Income-tax Act, 1961 for inadvertent mistake in computation of total income.

Analysis:
The appeal was against the order confirming a penalty imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. The assessee had debited certain amounts to its Profit & Loss account but failed to add them back to the total income during assessment. The Assessing Officer imposed a penalty, which was upheld by the CIT(A).

During the proceedings, the assessee admitted the inadvertent mistake of not adding back the amounts totaling to Rs. 78.26 lacs in the computation of total income. The nature of the amounts and their depiction in the Profit & Loss account indicated an unintentional error. The assessee acknowledged the mistake when pointed out by the AO and paid the due tax. It was not a case of intentional misleading but a genuine error in income computation.

Citing legal precedents, including the decision in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT, the Tribunal noted that penalties cannot be imposed for inadvertent and bona fide mistakes. Referring to the case law of CIT Vs. Somany Evergreen Knits, the Tribunal highlighted that penalties were deleted for mistakes made unintentionally. Given the circumstances of the case and the unintentional nature of the error, the Tribunal ordered the deletion of the penalty.

In conclusion, the Tribunal allowed the appeal, emphasizing that the excess claim of deduction was due to a bona fide and unintentional mistake. The penalty under section 271(1)(c) was deleted, following the legal precedents and the nature of the error as inadvertent. The order was pronounced in the Open Court on 13th June 2022.

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