TaxTMI 
TaxTMI 
2018 (8) TMI 123
X X X X Extracts X X X X
X X X X Extracts X X X X
.... determining total income at Rs. 61,16,360/-, thereby making an addition of Rs. 5,72,369/- on account of provision of gratuity which the assessee had surrendered vide his letter dated 09.12.2013. In the reassessment proceedings, penalty u/s 271(1)(c) of the IT Act was initiated and same was levied by the Assessing Officer of Rs. 1,77,000/- vide order dated 29.08.2014. Before the ld. CIT(A), the assessee made written submissions and relied upon some cases laws. The ld. CIT(A) after considering the submissions of the assessee, dismissed the appeal filed by him vide impugned order. The ld. CIT(A) in support of his decision also relied upon some case laws. Aggrieved by the impugned order, the assessee is in appeal before the Tribunal. 3. The ld. AR of the assessee has submitted a paper book containing 23 pages including the written submissions. The submissions placed before us read as under : 5.1 The Assessee's Chartered Accountant while computing the computation of income inadvertently made an error and failed to add the amount of Rs. 5,72,3697- to the taxable income. This was an inadvertent mistake and there was no intention on the part of the Chartered Accountant or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ered Accountant. 5.5 Penalty is not Exigible The Matter is completely disclosed The assessee had clearly disclosed the provision in the Balance sheet and has only failed to add it back to income in the computation of income. This is borne by the fact that the Id. A.O. has detected this from the Balance sheet. Disclosure in Balance sheet is disclosure - Suprement court in CIT v Corporation bank Ltd 254 ITR791 (2002) SC - Needle Industries (I) Ltd v CIT (1990) 183 ITR 393 Thus there is no failure on the part of the assessee to disclose the provision of Gratuity and it was only due to a mistake on the part of the Chartered Accountant, that in the computation of income the assessee did not add back the gratuity to the taxable income. HUMAN ERROR A mistake is a human error and can be committed by any one and that does not warrant a penalty. The following case laws state the same ratio: CASE LAWS [2012] 25 taxmann.com 400 (SC) SUPREME COURT OF INDIA Price Waterhouse Coopers (P.) Ltd. v. Commissioner of Income-tax, Kolkata-l* Section 271(1)(c), read with section 37(1), of the Inc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come - The assessee, a film distributor, declared an income of Rs. 24,760 after deducting Rs. 21,907 for amortisation of five films from a profit of Rs. 46,667 and submitted both a profit and loss account and a separate statement of amortiisation for 1969-70. On scrutiny, the ITO discovered that amortization in respect of two films had already been considered in drawing up the profit and loss account. The assessee admitted this error and agreed to the addition of the two amounts. t Penalty for concealment was imposed: Held, that it was a case of accidental and inadvertent mistake. Since the assessee had disclosed the basic facts by submitting the profit and loss account and the amortization account there was no attempt at concealment. The penalty levied was, consequently, illegal. Mahadeswara Movies v. CIT, (1983) 144 ITR 127 (Karn) 6.5 A wrong claim with disclosure of full facts, - Where the assessee, while disclosing extra interest charged over and above the limit fixed under Kerala Money Lenders Act, 1958, had wrongly claimed the excess as not liable to tax having realized the same due to misconception of law, since there was no conce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....missioner of Income-tax-l v. Gujarat State Fertilizers & Chemicals Ltd.* M.R. SHAH AND MS. SONIA GOKANI, JJ. TAX APPEAL NO. 127 OF 20131 JUNE 25,2013 Section 271(1)(c), read with section 115JB, of the Income-tax Act, 1961 - Penalty - For concealment of income [Wrong claim, effect of] - Assessee's claim with respect to depreciation and capital loss was found erroneous- When said fact was brought to assessee's notice, it offered amount of difference for taxation -Assessing Officer, however, levied penalty under section 271(1)(c) - Commissioner (Appeals) deleted penalty holding that it was bona fide inadvertent mistake - .Admittedly, even after making some disallowance on both counts, tax required to be paid as per section 115JB remained same - Whether in absence of any material to hold that assessee had either concealed particulars of his income or furnished inaccurate particulars, penalty under section 271(1)(c) was rightly cancelled - Held, yes [Paras 4,5 & 6] [In favour of assessee] [2013] 40 taxmann.com 17 (Andhra Pradesh) HIGH COURT OF ANDHRA PRADESH Commissioner of Income-tax v. Ms. Sania Mirza* MADAN B. LOKUR, CJ. AND SANJAY KUMAR, J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tantiate [and fails to prove that such explanation is bona fide and that all the facts relating to the same and material to the computation of his total income have been disclosed by him] then the amount added or disallowed in computing the total income of such person as a result thereof shall for the purpose of clause (c) of the sub section, be deemed to represent the income in respect of which particulars have been concealed. The most important aspects of the Section 271(1)(c) are concealed and inaccurate. 7.1.1 Concealed The first part of the section clearly states that the assessee should have concealed his income which basically mean to hide. It is humbly submitted a) The.subject matter of addition i.e. Gratuity was only a mistake. b) that everything was disclosed in the income tax returns and the accompanying documents such as balance sheet etc. and once an item is disclosed it cannot be taken as undisclosed or concealed. as both these are diagonally opposite to each other. 7.1.2 Our submission on Explanation 1 A) With reference to the abqve matters, the assessee had offered a cogent explanation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(JP)itwasneld. Mens rea may or may not be ingredient of a default or offence, but it always has relevance in those actions, which are intended to be visited with penal consequences. irrespective of whose burden it is to prove its presence or absence in such actions. The assessee has only made an error or mistake and not with any mal-intention. Therefore, penalty should not be levied. 7.1.6 As stated by Salmond on jurisprudence', if a person commits a forbidden act without wrongful intention or negligence and did his best as a reasonable man to avoid it, no useful purpose can be served to in holding such as person liable for it and its consequences. Thus, an accused should not be found guilty of an offence against the criminal law unless he has a guilty mind. The Hon'ble Supreme Court in Anantharam Verrasinghasu & Co. V. CIT. (1980) 123 ITR 457 (SO has concluded that. 'Before a penalty can be imposed it, the entirety of the circumstances must be taken into account and must point to the conclusion that the disputed amount represents income and that the assessee has Consciously concealed particulars of his income or deliberately furnished inaccu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in the manner prescribed by statute., it would be justified in refusing to impose penalty.' PRAYER TO DELETE PENALTY Sir, it is a well settled law that penalties are not to be imposed merely because there is a provision for imposing them. Penalties are a harsh punishment and should be imposed only if there is a willful contravention of any law and not where the law may have been contravened by misinterpretations or inadvertently or by mistake, especially where the person is not aware of the circumstances leading to the mistake. In Prof. C. Das Gupta V. Asst CIT [1997] 611 ITD 1 (Cal.) It was held that Imposition of penalty is purely discretionary Penalty proceedings are quasi-criminal proceedings in nature and hence penalty need not ordinary be levied unless the assessee either acted in defiance of law or acted in conscious disregard of its obligation. We pray before your honor to kindly drop the penalty proceeding in this matter.' 4. On the other hand, the ld. DR relied on the orders of the lower authorities and submitted that the authorities below are justified in imposing penalty u/s. 271(1)(c) of the IT Act for filing inaccurate ....