By C. N. Vaze, Shailesh Kamdar, Jagdish T. Punjabi, Bhadresh Doshi Chartered Accountants
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Section 271(1)(c) – Penalty cannot be levied in respect of wrong figures claimed by the assessee by mistake.
FACTS:
The assessee, who was engaged in the business of trading of books and periodicals, declared certain loss in its return of income for the relevant assessment year which was filed by a tax consultant on the basis of audit report u/s 44AB. The said loss included brought forward losses of earlier years. The Assessing officer, on going through past records, noticed that the assessee had wrongly claimed the brought forward loss in excess of the actual amount.
The assessee rectified the discrepancy before the completion of assessment. However, the Assessing Officer held that the assessee had furnished inaccurate particulars of income and imposed a penalty u/s 271(1) (c).
The CIT(A) deleted the penalty. On revenue’s appeal to the Tribunal, it was held:
HELD:
The details of brought forward losses are within the knowledge of the Assessing Officer in the form of return of income of earlier years filed by the assessee.
The mistake by the assessee was bonafide as it was based on the advice of the Tax Consultant.
It is the duty of the Assessing Officer to apply the relevant provisions of the Act for the purpose of determining the taxable income of the assessee and the consequential tax liability, even if the assessee failed to provide accurate figures relating to set-off of loss of earlier years already determined by the department.
Further, the mistake was inadvertent and was rectified before finalisation of assessment.
Merely because the assessee claimed the wrong amount of set-off, the Assessing Officer cannot reject the claim and consequentially levy the penalty considering wrong claim as concealment of income.
