Penalty: Concealment: Section 271(1)(c): 1999- 00: Inadvertent mistake in claiming exemption: No concealment: Penalty u/s. 271(1)(c) not justified:

In the A. Y. 1999-00, the assessee had claimed exemption of interest on tax free bonds of Rs. 5,60,11,644/-. In the course of the assessment proceedings, the assessee was asked to give details of interest on tax free bonds. While preparing the said details, it was noticed that 6% Government of India Capital Index Bonds purchased during the year were inadvertently categorised as tax free bonds and therefore interest of Rs. 75,00,000 was wrongly claimed as exempt. The assesee offered the said amount to tax. The Assessing Officer levied penalty u/s. 271(1)(c) of the Income-tax Act 1961 on the said amount. The Tribunal found that by inadvertent mistake interest at the rate of 6% on the Government of India Capital Index Bonds was shown as tax-free bonds. The Tribunal concluded that there was no desire on the part of the assessee to hide or conceal the income so as to avoid payment of tax on interest from the bonds. Accordingly, the Tribunal deleted the penalty.

On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:

“i) The decision of the Tribunal is based on finding of fact that there was an inadvertent mistake on the part of the assessee in including the interest received of 6% on the Government of India Capital Index Bonds as interest received on tax free bonds. It is not contended by the Revenue that above finding of fact by the Tribunal is perverse.

ii) In these circumstances, we see no reason to entertain the proposed question. Appeal is dismissed.”