2019 (1) TMI 800 - HC - Income Tax

Penalty u/s 271(1)(c) - particular claim made by the assessee was due to bonafide oversight or error - Held that - We have no hesitation in accepting the contention of the learned counsel of the Revenue that merely because the assessee surrenders certain income during assessment which is contrary to the claim in the return filed he automatically gets immunity from penalty. In the decision in the case of MAK Data P Ltd 2013 (11) TMI 14 - SUPREME COURT held that the assessee s contention that the income was offered to tax to by peace by itself would not be an immunity from penalty. As is well settled the penalty may still not be sustained. Reliance in this respect can be made to the decision of the Supreme Court in the case of Price Warehouse Coopers Pvt Ltd Vs. CIT 2012 (9) TMI 775 - SUPREME COURT . It was well settled that every wrong claim or a claim which has been rejected during the assessment would not automatically result into penalty proceedings. In the present case the Commissioner (Appeals) and the Tribunal concurrently held that the claims of the assessee which were withdrawn during the assessment itself was a pure mistake and oversight. The appeal is dismissed.

Summary

The Bombay High Court addressed an appeal by the Revenue against the Income Tax Appellate Tribunal's order deleting penalties under Section 271(1)(c) of the Income Tax Act, 1961, related to excess VRS payment claims and prior period income/expenses adjustments for AY 2004-05. The key legal issue was whether withdrawal of claims during assessment proceedings immunizes the assessee from penalty for furnishing inaccurate particulars or concealment of income.The Court affirmed the Tribunal and Commissioner (Appeals), holding that penalty under Section 271(1)(c) is not automatic upon withdrawal or surrender of income during assessment. Citing MAK DATA P Ltd v. CIT [2013] 358 ITR 593, the Court stated that "the assessee's contention that the income was offered to tax by peace by itself would not be an immunity from penalty." However, it emphasized that bona fide mistakes or oversights, as found by the lower authorities, are relevant and may justify deletion of penalty, referencing Price Waterhouse Coopers Pvt Ltd v. CIT (2012) 11 SCC 316.The Court concluded that since the claims were found to be due to "pure mistake and oversight," penalty was rightly deleted, and dismissed the Revenue's appeal.