Appeal success: Penalty overturned for inaccurate income particulars under Income Tax Act

The Appellate Tribunal allowed the appeal, setting aside the penalty imposed on the assessee under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. The Tribunal found that the assessee's revision to add back the provision for standard asset in the computation of income under section 115JB was indeed suo moto and not a result of scrutiny assessment, as argued by the authorities. The Tribunal concluded that the penalty imposition was unjustified, as the authorities failed to effectively rebut the assessee's claim of a genuine mistake.

---

---

Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income.

Analysis:
The case involved an appeal against the order confirming the penalty of Rs. 9,52,784 imposed on the assessee for not adding back the provision for standard asset in the computation of income under section 115JB of the Income Tax Act. The assessee initially filed its return of income declaring total income under normal provisions and section 115JB. During scrutiny, it revised the computation to add back the provision for standard asset. The Assessing Officer (A.O.) initiated penalty proceedings for inaccurate particulars of income, which was upheld by the Commissioner of Income Tax (Appeals) (CIT(A)). The A.O. argued that the revision was not purely suo moto but a result of scrutiny assessment, leading to the penalty imposition.

During the penalty proceedings, the A.O. and CIT(A) contended that the assessee's claim of a genuine mistake was unsustainable, as the provision for standard asset was not disclosed in the computation of income. However, the Appellate Tribunal found that the assessee's revision was indeed suo moto, as there was no mention of the issue by the A.O. for 8 months into the scrutiny proceedings. The Tribunal emphasized that the provision for standard asset was reflected in the profit and loss account, indicating compliance with financial reporting requirements. It was deemed a mistake not to add it back in the section 115JB computation. The Tribunal concluded that the CIT(A) erred in rejecting the assessee's claim and deleted the penalty, stating that the authorities failed to rebut the assessee's submission effectively.

In the final decision, the Appellate Tribunal allowed the appeal, setting aside the orders of the lower authorities and deleting the penalty imposed on the assessee.

---