Tribunal overturns penalty under Income Tax Act due to typographical error

The Tribunal allowed the appeal, condoning the delay in filing and overturning the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. It held that the penalty was not warranted as the mistake was a typographical error, not deliberate, and there was no concealment of income. The Tribunal emphasized that a mere disallowance of a claim does not justify a penalty, setting aside the CIT(A)'s decision and directing the deletion of the penalty addition by the Assessing officer.

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Issues:
1. Condonation of delay in filing the appeal.
2. Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Condonation of Delay:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax-1, Ludhiana, upholding the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The Authorized Representative submitted a delay of 9 days in filing the appeal due to misplaced documents. The Senior DR opposed the delay condonation. The Tribunal, considering substantial justice, condoned the delay and admitted the appeal for regular hearing.

Levy of Penalty:
The assessee, a partner in a firm engaged in textile yarn processing, filed a return declaring income of Rs. 8,11,800. During scrutiny, it was found that the assessee wrongly claimed a Long Term Capital Loss of Rs. 7,14,554 related to a gifted property. The Assessing officer added this amount to the income, leading to the penalty imposition. The CIT(A) upheld the penalty, prompting the appeal challenging it. The Authorized Representative argued it was a genuine mistake due to a typographical error by the Chartered Accountant, not deliberate. The Senior DR contended it was a false claim with deliberate collusion between the CA and the assessee.

Analysis of Penalty Imposition:
Upon review, the Tribunal found the mistake was not a deliberate attempt to furnish inaccurate particulars but a typographical error. The assessee disclosed all particulars of income, indicating no concealment. Citing precedent, the Tribunal held that a mere disallowance of a claim does not warrant a penalty under section 271(1)(c). Referring to relevant judgments, the Tribunal concluded that no penalty was legally imposable in this case. Consequently, the order of the CIT(A) was set aside, directing the Assessing officer to delete the penalty addition.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing that the penalty was not justified given the circumstances of the case and the disclosure of all income particulars.

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