Income Tax Appellate Tribunal

Pawan Garg Vs. The ACIT, Circle-2

MANU/IG/0008/2022

17.01.2022

Direct Taxation

Bonafide mistake on the part of the assessee would not attract levy of penalty where all the particulars of income are duly disclosed

Present appeal is preferred by the assessee against the order passed by the Learned Commissioner of Income Tax, ['CIT(A)'] for assessment year 2014-15, wherein, vide the impugned order, the Learned CIT(A) has upheld the levy of penalty imposed under Section 271(1)(c) of the Income Tax Act, 1961 (IT Act) to the tune of Rs. 2,20,797.

The Learned Authorised Representative (AR) submitted that, no penalty was imposable as the assessee had only made a wrong claim and not a false claim as all the facts were before the Assessing officer at the time of assessment proceedings and for the reason that all the figures were duly reflected in the computation of income. It was also submitted that, the mistake had occurred due to some error at the end of the Chartered Accountant (C.A.) who had filed the return of income and that the assessee should not be burdened with the penalty as it was a genuine mistake.

There is no concealment of any material fact by the assessee. At best, it can be said that the claim made by the assessee with respect to the Long Term Capital Loss was an incorrect claim or a wrong claim but it was not a false claim by any measure as there was only a mistake in the legal sense that the gift made by the assessee to the son was considered as a transfer in the computation of income and the resultant figure was shown as a capital loss. It is also a fact on record that, the assessee had accepted the same at the time of assessment proceedings.

Therefore, on the facts of the present case, it is not a case where the particulars of income in relation to which the penalty has been levied were either incorrect or were concealed. The amount of capital loss has duly been disclosed in the computation of income and, therefore, it cannot said to be a case of the assessee attempting to make a false claim. The Hon'ble Apex Court in the case of CIT Vs. Reliance Petro Products Ltd. has clearly held that, if all the particulars of income are duly disclosed, the mere disallowance of claim or non-acceptance of a claim would not attract levy of penalty under Section 271(1)(c) of the Act.

Similarly, the Hon'ble Apex Court in the case of Price Waterhouse Coopers Pvt. Ltd. Vs. CIT has held that, a bonafide mistake on the part of the assessee would not attract levy of penalty where all the particulars of income are duly disclosed and where there is just a failure on the part of the assessee to act as per the provisions of the Act while computing the income. Therefore, guided by the judgments of the Hon'ble Apex Court, present Tribunal held that no penalty was legally imposable on the facts of the present case. Accordingly, the order of the Ld. CIT(A) is set aside. Appeal allowed.

Tags : Penalty Imposition Legality

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