June 2019

Section 271(1)(c) Penalty Filing inaccurate particulars of income Revised income filed voluntarily before detection Reason stated: accountant error Human error Bona fide mistake penalty not leviable

AJAY R. SINGH
Advocate

8

Pr. CIT-18 vs. Padmini Trust [ITA No. 424 of 2017; (Bombay High Court) Dated 30th April, 2019]

 

[Padmini Trust vs. ITO-14(1)(4); Bench: C; Mum TAT ITA No. 5188/Mum/2013]

Dated 28th January, 2016;

A.Y. 2009-10.

 

Section 271(1)(c) Penalty Filing inaccurate particulars of income Revised income filed voluntarily before detection Reason stated: accountant error   Human error Bona fide mistake penalty not leviable

 

The assessee is a Trust. The assessee had filed a return of income for the A.Y. 2009-10. The return was taken for scrutiny by the A.O. by issuing notice of scrutiny assessment on 27.09.2010. When the assessment proceedings were pending, the assessee tried to rectify the return by making a declaration and enlarging certain liability. Commensurate additional income tax of Rs. 99,05,738 was also paid on 26.09.2011. This was conveyed to the A.O. by letter dated 15.11.2011. While completing the assessment, the A.O. held that the revised return was not acceptable since it was filed after the last day for filing such a revised return. He, however, made no further additions over and above the declaration made by the assessee in the return. On the ground that the assessee had not disclosed the income in the original return, he initiated the penalty proceedings. He imposed a penalty which was confirmed by the CIT(A).

 

Being aggrieved with the CIT(A) order, the assessee filed an appeal to the ITAT. The Tribunal held that there is wrong categorisation of capital gains and loss and the same are evident from the papers filed. It is a case of wrong categorisation of the income under the wrong head. The revised computation of income basically corrects the mistake in such wrong categorisation. It is a case where the assessee paid taxes on the extra income computed by virtue of the revised computation along with the statutory interest u/s. 234A, 234B and 234C as the case may be. It is a settled issue that penalty cannot be excisable in a case where the income was disclosed but under the wrong head of income. Accordingly, levy of penalty u/s. 271(1)(c) of the Act was deleted.

 

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