ITAT deletes penalty on grounds of bonafide and unintentional mistake

ITAT deletes penalty on grounds of bonafide and unintentional mistake.

The ITAT admitted that the excess claim of deduction was due to bona fide and unintentional mistake

The Pune Bench of Income Tax Appellate Tribunal headed by R.S. Syal (Vice President) and Partha Sarathi Chaudhury (Judicial Member) recently deleted the penalty of an Assessee on grounds that the excess claim of deduction by the Assessee was due to a bona fide and unintentional mistake.

The Assessee in the present case debited to its profit and loss account, the Education cess on TDS, Income Tax on TDS and TDS, and the amounts were claimed in the profit and loss account. The amounts totalled to Rs. 78,26,928/-.

Upon being questioned as to why the amounts were not disallowed and added to the total income during the assessment proceedings, the Assessee admitted that the proposed disallowances were due to inadvertent mistake. He accepted that the add-back could not be made and that the Auditor also failed to alter the Assessee.

In furtherance of this, the AO imposed a penalty of Rs. 24,37,233, which was further upheld in the first appeal.

In view of the submissions made before the Bench, it opined that when pointed out by the AO, the Assessee admitted its inadvertent mistake in not adding back the above amounts which were debited to the Profit & loss account.

The Bench further noted that "It is clear from the nature of the amounts and the way of their depiction thereof in the Profit & loss account that the assessee inadvertently committed a mistake in not adding back the amount of income tax, etc paid by it in the computation of total income"

The Bench also placed reliance on the cases Price Waterhouse Coopers Pvt. Ltd. Vs. CIT and CIT Vs. Somany Evergreen Knits wherein the penalty was deleted when the mistake was bona fide and unintentional.

"Since the facts and circumstances of the instant case amply show that the excess claim of deduction was due to bona fide and unintentional mistake, respectfully following the precedents, we order to delete the penalty", as ordered by the Bench.