| COURT: | |
| CORAM: | |
| SECTION(S): | |
| GENRE: | |
| CATCH WORDS: | |
| COUNSEL: | |
| DATE: | (Date of pronouncement) |
| DATE: | March 5, 2013 (Date of publication) |
| AY: | |
| FILE: | |
| CITATION: | |
| Click here to download the judgement (bennett_colemen_penalty_inadvertent_mistake.pdf) |
No s. 271(1)(c) penalty if income not offered to tax due to “inadvertent mistake”
The assessee claimed deduction/ exemption of interest on tax-free bonds of Rs.5.60 crores. When the AO asked the assessee to give details of the interest on tax-free bonds, the assessee stated that it had inadvertently treated taxable interest of Rs. 75 lakhs as being tax-free and offered the said sum to tax. The AO levied penalty u/s 271(1)(c) for concealment of income/ filing inaccurate particulars of income. This was upheld by the CIT(A) though deleted by the Tribunal on the ground that there was an “inadvertent mistake” by which the taxable bonds were classified as tax-free and that there was “no desire” on the part of the assessee to hide or conceal its income so as to avoid payment of tax on interest from the bonds. On appeal by the department, HELD dismissing the appeal:
The decision of the Tribunal is based on finding of fact that there was an inadvertent mistake on the part of the assessee in including the interest received of 6% on the GOI Capital Index Bonds as interest received on tax free bonds. It is not contended by the Revenue that above finding of fact by the Tribunal is perverse. In these circumstances, there is no reason to entertain the proposed question
Note: It was also decided that offering income under the wrong head (capital gains instead of other sources) does not attract s. 271(1)(c) penalty
Bombay HC & ITAT both have demonstrated how the penalty issues need to be handled – with an open & large hearted approach.