High Court upholds CIT(A)'s decision on penalty due to clerical error

The High Court upheld the decision of the CIT(A) to set aside the penalty imposed under Section 273(2)(aa) of the Income Tax Act due to a clerical error in the initial notice. The Court directed the Assessing Officer to recompute the penalty, stating that the mistake in the notice was of a clerical nature and did not invalidate the penalty. The appeal was dismissed as no substantial question of law arose, and the pending application was disposed of.

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Issues Involved:
The judgment involves the issue of penalty imposition under Section 273(2)(aa) of the Income Tax Act based on a clerical error in mentioning the wrong section in the assessment order and the first notice.

Summary:
The High Court of Punjab and Haryana heard two income tax appeals, ITA No. 12 of 2003 and ITA No. 13 of 2003, with identical issues. The appellant, M/s. Industrial Cables (India) Ltd., challenged the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', regarding penalty imposition under Section 273(2)(aa) for the assessment year 1988-89.

The Tribunal found that the Assessing Officer had issued a notice under Section 273(2)(aa) and the appellant responded to the default mentioned under this section. Despite a clerical error in mentioning the wrong section in the initial notice, the Tribunal held that the penalty was imposed after providing the appellant with a proper opportunity to address the specific default under Section 273(2)(aa). The mistake in the initial notice was considered of a clerical nature and subsequently rectified.

Moreover, Mr. Arun Kaushal, Senior Manager, Taxation, apologized for the error, and the Tribunal accepted his apology. The Tribunal concluded that the penalty was imposed correctly by the Assessing Officer and that the initial notice under Section 273(2)(a) should not invalidate the penalty under Section 273(2)(aa).

The High Court upheld the decision of the CIT(A) to set aside the order and directed the Assessing Officer to recompute the penalty. As no substantial question of law arose, the appeal was dismissed, and the pending application was disposed of.

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