INCOME TAX ACT, 1961

Section 271(1)(c)

Penalty under section 271(1)(c) - Bona fide error - CA filed affidavit that he misunderstood related provisions -

Revenue challenged the order of Tribunal deleting the penalty under section 271(1)(c). Tribunal found that the assessee had discharged the onus and established its bona fides for the purpose of Explanation 1 to section 271(1)(c). The Chartered Accountant of assessee had filed his own personal affidavit accepting his fault that he had misunderstood and misinterpreted the provisions of section 115JB, since it was the first year when section 115JB was made applicable to companies covered by section 10A. Held: Explanation and conduct of assessee did not reflect any attempt to propound an excuse which was sham or ruse. The reason given was not a device to cover an ulterior purpose. Noticeably, assessee had realized its fault and had filed revised return in subsequent years. Thus, as Tribunal had observed that the mistake made by Chartered Accountant was a result of human error in correctly interpreting and applying the complex interconnect between two sections, the error was bona fide and hence, the order of Tribunal warranted no interference.

Relied on:Price Waterhouse Coopers (P.) Ltd. v. CIT (2012) 348 ITR 306 (SC) : 2012 TaxPub(DT) 2967 (SC)

REFERRED :

FAVOUR : In assessee's fvaour

A.Y. :

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