INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Leviability - Auditor's inadvertent mistake in raising higher service tax claim -

AO found that there was difference in amount claimed by assessee as service tax payment and amount of challans furnished for verification during the course of assessment proceedings. Accordingly, the AO held that a claim of inflated service tax payment was made by reducing such inflated amount from the gross receipts. Subsequently, he levied penalty under section 271(1)(c) for furnishing inaccurate particulars of income. Assessee submitted that the said difference occurred due to auditor's inadvertent mistake in raising higher service tax claim. Held: AO levied penalty on account of difference in actual service tax paid and that claimed at assessee's behest. However, the said difference appeared to have arisen on account of the assessee's auditor's certificate issued inadvertently. It is settled that an inadvertent mistake in raising a claim is neither concealment nor filing of inaccurate particulars of income. Further, it is also settled that quantum and penalty are distinct proceedings wherein each and every disallowance/addition made in case of the former and does not automatically attract the latter penal provision. Accordingly, the Revenue erred in penalizing the assessee under section 271(1)(c) due to the auditor's inadvertent mistake in raising higher service tax claim and hence, the said penalty was deleted.

REFERRED : Price Waterhouse Coopers (P.) Ltd. v. CIT (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC) and CIT v. Reliance Petro-products Pvt. Ltd. (2010) 322 ITR 158 (SC) : 2010 TaxPub(DT) 1683 (SC).

FAVOUR : In assessee's favour

A.Y. : 2015-16

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