INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - Leviability - Wrong claim made out of bona fide mistake

AO made disallowance of Rs. 91,96,966 on account of excess. CIT(A) sustained disallowance. AO levied penalty under section 271(1)(c) on addition to the extent of Rs. 91,96,966 sustained in appellate order. Assessee contended that it was mere disallowance of claim to some extent on account of error in computation and, therefore, penalty was not required to be levied. Held: It was not disputed that the assessee was eligible for the claim of the expenses but it was disallowed to the extent of Rs. 91,96,966 out of the total claim of the assessee. CIT(A) observed that assessee realized the mistake and filed revised statement of income in quantum appeal. Therefore, claim made by assessee was not wrongful but was on account of bona fide error to the extent for which the amount was added in the toal income. This error in making the claim of expenses could not be equated with the furnishing of inaccurate particular of income. Therefore, no penalty could be levied.

Followed:/b>CIT v. Reliance Petro Products Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC).