Tribunal overturns penalty for incorrect deduction, citing lack of intent.

Sh. Hari Dutt Sharma Versus Income Tax Officer Ward – 49 (3) New Delhi

Sh. Hari Dutt Sharma Versus Income Tax Officer Ward – 49 (3) New Delhi - TMI Issues:
Penalty imposition under section 271(1)(c) of the Act for claiming incorrect deduction u/s 80 IC.

Analysis:
The appeal was filed against the CIT(A)'s order confirming the penalty imposition of Rs. 43,58,400 under section 271(1)(c) of the Act for the assessment year 2014-15. The appellant, a proprietor eligible for deduction u/s 80 IC of the Act, realized an error in claiming 100% deduction instead of 25%. The revised return was filed after the limitation period, and the tax difference was paid before the assessment completion. The Assessing Officer alleged deliberate concealment of income, initiating penalty proceedings. Despite the appellant's explanation of a genuine mistake promptly rectified, penalty was levied. The CIT(A) upheld the penalty, leading to the appeal.

The tribunal noted the appellant's eligibility for deduction u/s 80 IC, supported by audit reports. The error in counting eligible assessment years was attributed to the Chartered Accountant's inadvertent mistake, not intentional concealment. Citing the Price Water Coopers case, the tribunal emphasized that penalties are unwarranted for inadvertent errors without intent to deceive. Distinctions were drawn from the Dharmendra Textile and Zoom Communication cases, highlighting the lack of willful concealment in the present case. The tribunal referenced the Deep Tools Pvt. Ltd. case, emphasizing the importance of bona fide mistakes by professionals and the absence of collusion or malice. Ultimately, considering the totality of facts, the tribunal found no basis for penalty imposition and directed the Assessing Officer to delete the penalty amount, allowing the appeal.

In conclusion, the tribunal set aside the CIT(A)'s decision and ruled in favor of the appellant, emphasizing the absence of intentional concealment and the genuine nature of the error in claiming the deduction.