Bona fide inadvertent mistake bars penalty under Section 271(1)(c) where no intention to evade tax.

Where alleged inaccurate particulars arose from a bona fide inadvertent consolidation of losses by the tax consultant, the legal principle applied was that penal provision for furnishing inaccurate particulars requires culpable intent or concealment; absent mens rea and mala fide conduct and where the assessment accepted the returned income, the penalty provision does not apply. The tribunal found the excess claim resulted from a clerical consolidation error without intention to evade tax and accordingly set aside the penalty imposed on the assessee.

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Issues: (i) Whether penalty under Section 271(1)(c) of the Income-tax Act, 1961 is sustainable where alleged inaccurate particulars in the return arose from an inadvertent consolidation of losses by the tax consultant and there was no mens rea to evade tax?

Analysis: The Tribunal examined the facts that the assessee had originally disclosed separate speculation loss and short-term capital loss in the original return and furnished all relevant particulars; subsequently, on advice and after audit, a revised return was filed in which both losses were consolidated under the head "speculation loss" due to a mistake by the person responsible for filing. The record shows absence of any intention to evade tax and no evidence of mala fide conduct. The Tribunal noted that the asserted excess claim arose from a clerical/consolidation error by the tax consultant and that the assessment proceedings had accepted the returned income. The legal issue focused on the applicability of Section 271(1)(c) when the inaccuracy results from a bona fide inadvertent mistake rather than deliberate concealment.

Conclusion: Penalty under Section 271(1)(c) of the Income-tax Act, 1961 is not sustainable on the facts; the penalty of Rs. 8,51,835 imposed for furnishing inaccurate particulars is set aside in favour of the assessee.

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