TMI Blog2022 (1) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... er authorities and following the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd. [ 2010 (3) TMI 80 - SUPREME COURT ] - thus we hold that there cannot be a penalty where there was bond fide error in the claim. We hold that there was wrong claim in the return of income filed by the assessee which cannot partake the characteristics of furnishing in-accurate particular of income. Therefore, we delete the levy of penalty considering it as bona fide error. Hence, the ground of appeal of the assessee is allowed. - ITA No. 347/AHD/2019 - - - Dated:- 28-1-2022 - Shri Rajpal Yadav, Vice President And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Anil Kshatriya, Advocate For the Revenue : Shri Alpesh Parmar, Sr.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: This appeal is filed by an assessee and is arising out of the order of the Commissioner of Income tax, Appeals-9, Ahmedabad, [ here-in after the Ld. CIT(A)] passed on 17-01-2019 in appeal No. CIT(A)-9/11118/ITO Wd-3(1)(3)/16-17 where in the levy of penalty of ₹ 28,41,863/- levied by the assessing officer confirmed by the Ld. CIT(A) for Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g suffered heavy loss, it got itself registered as Sick Industrial Company with BIFR with effect from 02.02.2011. 5. For the A. Y. 2012-13, the appellant furnished its e-return of income on 28.09.2012, declaring therein loss of ₹ 10,73,25,012/- only. The AO made an assessment u/s 143(3) of the Act assessing loss at ₹ 2,56,09,614/- while making the assessment, the A. O. had made additions/disallowance on account of excess of bad debts for ₹ 7,25,19,032/- and ₹ 91,96,966/- on account of excess provision for bad debts. The Ld. CIT(A) has given the relief to the extent of ₹ 7,25,19,032/- and sustained the addition of ₹ 91,96,966/- in quantum appeal filed by the assessee. 6. This penalty amount is levied only on addition to the extent of ₹ 91,96,966/- sustained in appellate order. Therefore, it is important to extract the nature of addition/disallowance from the original assessment. The discussion made is extracted here in below in respect of the addition on which the questioned penalty was levied: 4. During the course of assessment proceedings, it was gathered that the assessee had made provision of bad and doubtful debts of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Dharmendra Textiles Proceessors(discussed above), penalty u/s. 271(1)(c) is a `civil liability and `mean era need not be proved for the levy of penalty. Mere, establishing of inaccuracy in particulars of income would be adequate for attracting the `civil liability of penalty u/s. 271(1)(c) of the I. T. Act. 7. Considering all these facts as brought out and more particularly, the fact that the assessee deliberately furnished inaccurate particulars in respect of provision for bad debts which was found to be wrong and discussed at length in the assessment order, I am fully satisfied that the assessee has conceled the particulars of income as well as furnished inaccurate particulars of income during the whole assessment proceding and as such I proceed further to levy minimum penalty of ₹ 28,41,863/- u/s. 271(1)(c) of the act as worked out in the below table; Thus, the penalty is worked out at ₹ 28,41,863/- being 100 % on tax sought to be evaded on a sustained addition of ₹ 91,96,966/- on account of error in computation of the claim of provision of bad and doubtful debts. 9. In an appeal filed by the assessee against the penalty orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts audited but did not come forward to offer the excess provision voluntarily. Therefore, it is highly improbable that the appellant was not aware of this excess provision which was required to be offered in A.Y .2012-13 and was required to file the revised return of income for A. Y. 2012-13, if it had in fact examined this issue on the basis of the records of the appellant itself. However, the appellant did not reconcile this discrepancy and it was attempted to be reconciled only when the A.O. issued the notice u/s.142(1) of the Act asking various details which made the appellant to collect and compile the details and on such compilation, the appellant gathered that such mistake has been crept in and then came forward to offer the income. Thus, this is a clear-cut case of furnishing inaccurate particulars knowingly and with an intention to seek the tax to be avoided as defined in section 271(1)(c) of the Act. The Assessing Officer has rightly held that the case of the appellant was for concealing the particulars as well as furnishing inaccurate particulars of income and levied the penalty of ₹ 28,41 ,863/- which is the minimum penalty imposed @ 100% of the tax sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 91,96,966/- is added to the income of the assessee. He further submitted that it is mere mistake in deriving the claim which was detected by the assessee during the course of assessment proceeding. The assessee submitted a revised computation of income, whereby the error was rectified and the assessee surrendered the amount for the purpose of computation of income suo-motto. He further argued before us that in the quantum appeal, the ld. CIT(A) in para 5.2 of the appellate order, has clearly stated that the appellant realized the mistake and filed revised statement of income. The CIT(A) has given this finding after considering finding of the A.O. The said finding of facts has not been challenged by the department further and has attained finality. Therefore, the A.O. is not permitted to take a contrary stand to justify the levy of penalty order. The AR of the assessee also relied upon the decision of Hon ble Supreme Court of India in the case of CIT V/s Reliance Petroproducts Limited 332 ITR 168 (SC) where in it is held that merely because the appellant had made claim which was not accepted or was not acceptable fully would not attract penalty u/s. 271(1)(c) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has observed that the assessee realized the mistake and filed revised statement of income at para 5.2 in quantum appeal. Therefore, the claim made by the assessee was not wrongfully but was on account of bona fide error to the extent for which the amount is added in the total income. This error in making the claim of expenses cannot be equated with the furnishing of inaccurate particular of income. Considering, the above finding and observations made by the lower authorities and following the decision of Hon ble Supreme Court in the case of CIT Vs. Reliance Petro Products Ltd. Reported in 322 ITR 158 we hold that there cannot be a penalty where there was bond fide error in the claim. The relevant finding in the judgment of Hon ble Supreme Court (supra) reads as under: A glance of provision of section 271(1)(c ) would suggest that in order to be covered, there has to be concealment of the particulars of the income of the assessee. Secondly, the assessee must have furnished inaccurate particulars of his income. The instant case was not the case of concealment of the income. That was not the case of the revenue either. It was an admitted position in the instant case that no in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention could not be accepted as the assessee had furnished all the details of its expenditure as well as income in its return, which details, in themselves, were not found to be inaccurate nor could be viewed as the concealment of income on its part. It was up to the authorities to accept its claim in the return or not. Merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that, by itself, would not attract the penalty under section 271(1)(c). If the contention of the revenue was accepted, then in case of every return where the claim made was not accepted by the Assessing Officer for any reason, the assessee would invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. [Para 10] 17.1 In view of the above, we hold that there was wrong claim in the return of income filed by the assessee which cannot partake the characteristics of furnishing in-accurate particular of income. Therefore, we delete the levy of penalty considering it as bona fide error. Hence, the ground of appeal of the assessee is allowed. 17.2 In the result the levy of the penalty for an amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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