No Penalty u/s 271(1)(c) Imposed when Inadvertent and Bonafide Mistakes committed by assessee: ITAT

The assessee debited to its Profit and Loss account -Education cess on TDS amounting cess in amounting to Rs. 982246; Income tax paid of Rs. 76,59,480; Penalty on TDS of Rs. 16,602; and TDS paid of Rs. 52,600. Such amounts totaling Rs. 78,26,928 were claimed in the Profit & loss account. AO imposed a penalty amounting to Rs. 24,37,233 u/s 271(1)(c) of the Act with reference to the above disallowances totaling Rs.78.26 lacs, which came to be affirmed in the first appeal.

The assessee admitted its inadvertent mistake in not adding back the above amounts totaling Rs.78.26 lacs in the computation of total income, which was debited to the Profit & loss account. It is clear from the nature of the amounts and the way of their depiction thereof in the Profit & loss account that the assessee inadvertently committed a mistake in not adding back the amount of income tax, etc paid by it in the computation of total income. The assessee accepted the disallowance and paid due tax thereon. It is not a case where the assessee tried to mislead the Revenue by intentionally claiming the higher amount of deduction. Rather it is a case of inadvertent mistake in the computation of income. The Hon’ble Supreme Court in Price Waterhouse Coopers Pvt. Ltd. Vs. CIT (2012) has held that no penalty u/s.271(1)(c) can be imposed in respect of inadvertent and bona fide mistakes committed by the assessee. The Hon’ble High Court in CIT Vs. Somany Evergreen Knits (2013) also deleted the penalty which occurred due to bonafide and inadvertent mistake of the Chartered Accountant while filing the return.

Since the facts and circumstances of the instant case amply show that the excess claim of deduction was due to bonafide and unintentional mistake, following the precedents, the tribunal ordered to delete the penalty. Hence, the appeal was allowed.