The Tax Publishers2019 TaxPub(DT) 2134 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Where assessee while filing reply to show-cause notice that assessee realized its error and admitted that aforesaid franking charges ought to have been disallowed, therefore, as decided in Price Waterhouse P. Ltd. v. CIT [(2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC)] penalty under section 271(1)(c) could not be levied, where it involves a mistake by assessee on account of human error.

Penalty under section 271(1)(c) - Assessee debited capital expenditure of franking charges without adding back the same in its computation of income - Validity -

During assessment, AO noted that the authorised capital of the assessee was increased. On perusal of the details, AO found that stamp duty, fee of ROC and franking charge were debited for increase of authorized share capital. The said expenditure was incurred subsequent to the commencement of business and the same was capital in nature incurred for acquiring benefit for enduring nature not allowable under section 35D. Assessee though disallowed the stamp and ROC fees however, the said franking charge was not disallowed. AO disallowed the said franking charge and initiated the penalty under section 271(1)(c). Held: Assessee had shown reasonable cause by offering the franking charges during the assessment by offering suo moto disallowance at the cost of repetition. Assessee while filing reply to show-cause notice that assessee realized its error and admitted that aforesaid franking charges ought to have been disallowed. This fact was duly recorded by AO in the penalty order. AO had not countered the bona fide explanation furnished by assessee. As decided in Price Waterhouse P. Ltd. v. CIT [(2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC)] held that penalty under section 271(1)(c) could not be levied, where it involves a mistake by assessee on account of human error.

Followed:Price Waterhouse Coopers (P.) Ltd. v. CIT - I (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC)Relied:Vedabai Alias Vaijayanatabai Baburao Patil v. Shantaram Baburao Patil & Ors.(2002) 173 CTR 300 (SC) : 2002 TaxPub(DT) 0475 (SC) Collector, Land Acquisition v. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) : 1987 TaxPub(DT) 1279 (SC) Vijay Vishin Meghani v. Dy. CIT (2017) 398 ITR 250 (Bom-HC) : 2017 TaxPub(DT) 4355 (Bom-HC)

REFERRED :

FAVOUR : In assessee's favour

A.Y. :


INCOME TAX ACT, 1961

Section 271(1)(c)

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