2016 (5) TMI 695 - HC - Income Tax

High Court upholds deletion of penalty under Income Tax Act, citing inadvertent mistake with no intent to conceal income.

Pr. Commissioner of Income Tax-I, Chandigarh Versus M/s Punjab State Federation of Coop. Sugar Mills Limited

The High Court upheld the deletion of the penalty under Section 271(1)(c) of the Income Tax Act by the CIT(A) and the Tribunal. The penalty was cancelled ... Levy of penalty u/s 271(1)(c) - Held that:- The assessee had submitted revised computation during the course of assessment proceedings and there was no intention to conceal the income. Further, the Tribunal held that the assessee had duly paid tax on the amounts of capital gains tax and property tax suo motu and due to inadvertent mistake on the part of the counsel of the assessee, the amount of capital gains tax and property tax paid were not added back resulting into refund. The Tribunal had observed that by not adding back the amount, no one had been benefitted as the assessee is an undertaking of Government of Punjab. No illegality or perversity could be demonstrated by learned counsel for the revenue that the findings of the CIT(A) and the Tribunal were erroneous or perverse in any manner. - Decided against revenue Issues:1. Whether the penalty under Section 271(1)(c) of the Income Tax Act was rightly deleted by the CIT(A) and upheld by the TribunalRs.Analysis:Issue 1: Penalty under Section 271(1)(c) of the Income Tax ActThe primary issue in this appeal was whether the penalty under Section 271(1)(c) of the Income Tax Act, levied for furnishing inaccurate particulars of income, was rightly deleted by the CIT(A) and upheld by the Tribunal. The Assessing Officer had initiated penalty proceedings due to the assessee claiming expenses for capital gain tax and property tax without adding them back in the computation of total income. The penalty was levied under Section 271(1)(c) of the Act, amounting to Rs. 61,13,801. However, the CIT(A) cancelled the penalty, citing that the mistake of not adding back the amounts in the statement of income was made by the counsel filing the return, and there was no intention to conceal income. The Tribunal upheld this decision, noting that the assessee had paid tax on the amounts suo motu and that no one had benefitted from the inadvertent mistake. The Tribunal emphasized that the order of the CIT(A) was based on an appreciation of facts, and no illegality or perversity was demonstrated by the revenue's counsel to challenge the findings.In conclusion, the High Court found no grounds for interference, as there was no demonstrated error or perversity in the decisions of the CIT(A) and the Tribunal. Therefore, no substantial question of law arose, leading to the dismissal of the appeal by the revenue.This detailed analysis of the judgment showcases the key legal issues, the arguments presented, and the reasoning behind the decisions made by the authorities involved in the case.