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2015 (4) TMI 1165 - HC - Income TaxPenalty u/s 271(1)(c) - violation of the one term settlement - Whether the explanation 4 to Section 271(1)(c) of the Income Tax Act (as it stood before the amendment by the Finance Act, 2002) could be invoked for the purpose of penalty where the income remained at loss? - Held that:- As per the statement annexed by the assessee with the return, they indicated that as per the one time settlement with the Financial Institute, they were required to pay 8.5 Crores on or before 30.6.92 and one of the conditions of the settlement was that if the amount is not paid by the due date then waiver of interest would be forfeited and liquidated damages would also be imposed. Admittedly, the assessee did not abide by the terms of the one time settlement, could not pay the entire due of 8.5 Crores on or before 30.6.92, they paid it only on 7.4.1993. Till filing of the return they had only paid a sum of ₹ 5.25 Crores and the deduction claimed in the earlier year was deducted and the total deduction claimed was ₹ 3,33,25,278/ - and thereafter under the apprehension that as they have violated the one time settlement, therefore, they are liable to pay compound interest and liquidated damages, the statement was made in the return. It was, therefore, a case whether under the apprehension that due to violation of the one term settlement the appellant was liable to pay compound interest and liquidated damages they made certain statement in the return and that too when they were not liable to pay any tax due no income having accrued on account of sustained loss, therefore, in the facts and circumstances of the case, we are of the considered view that it is not a case where an inaccurate or statement is made deliberately or there is deliberate concealment of fact by the appellant. The error seems to be bonafide therefore, we are of the considered view that the penalty could not have been imposed particularly when on the mistake on the part of the Chartered Accountant, the penalty of ₹ 3,30,195/ - has been made. - Decided in favour of assessee
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