Tribunal Orders Removal of Penalty for Pharma Firm's Inadvertent Tax Errors in 2011-12 Assessment Year.

The Tribunal allowed the appeal, directing the deletion of the penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2011-12. The appellant, a pharmaceutical company, successfully argued that the discrepancies in their income computation were inadvertent human errors, which were rectified during assessment proceedings. The Tribunal accepted this explanation, referencing a precedent case, and deemed the penalty of Rs. 17,81,066 unjustified. The Assessing Officer was instructed to remove the penalty, and an additional ground raised by the assessee was left open for future consideration.

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Issues involved:
The judgment involves the challenge against the levy of penalty under section 271(1)(c) of the Income Tax Act for the assessment year 2011-12.

Summary:

Issue 1: Challenge against penalty under section 271(1)(c) of the Act
The appellant challenged the penalty of Rs. 17,81,066 imposed under section 271(1)(c) of the Income Tax Act, arguing that the National Faceless Appeal Centre erred in upholding the penalty. The only grievance of the assessee was against this penalty.

Details:
The appellant, a pharmaceutical products company, filed its return of income for the relevant year but failed to include certain amounts in the computation of income. The Assessing Officer made additions to the total income, including disallowances for donation and charity, loss on sale of assets, and sales promotion expenses. Subsequently, a penalty notice was issued, and a penalty of Rs. 17,81,066 was levied based on these additions. The appellant contended that the discrepancies were inadvertent human errors and rectified the computation during assessment proceedings, paying the differential tax amount. The Tribunal found that the mistakes were bona fide and accepted the appellant's explanation, citing the decision in Price Waterhouse Coopers (P.) Ltd. v/s CIT. Consequently, the penalty was deemed unjustified, and the AO was directed to delete it.

Outcome:
The Tribunal allowed the appeal, directing the deletion of the penalty under section 271(1)(c) of the Act. The additional ground raised by the assessee was kept open for future consideration.

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