The Tax Publishers2021 TaxPub(DT) 0692 (Mum-Trib)

INCOME TAX ACT, 1961

Section 271(1)(c)

Deferred tax asset written off in P&L A/c as exceptional item was reported in financials, however, same was inadvertently left to be added back to net loss before tax while making computation of taxable income. That error was only a computation error made in the return of income which occurred due to overlooking contents of the profit and loss account. The contents of financial statements did not conceal any particulars. Also assessee had not, in any way, taken any benefit by carrying forward a higher loss and, therefore, AO was not justified in levying penalty.

Penalty under section 271(1)(c) - Concealment or furnishing of inaccurate particulars - Inadvertent mistake -

AO noticed that assessee had debited Rs. 2,02,33,602 as deferred tax asset written off in profit and loss account as exceptional item. However, same was not disallowed in computation of taxable income. In response to a query raised by AO, assessee explained that same remained to be added inadvertently and accepted addition. AO levied penalty under section 271(1)(c). Held: Financial statements of assessee were placed before AO during the course of assessment proceedings which clearly stated deferred tax asset written off as a separate line item on the face of profit and loss account. This clearly indicated that deferred tax asset written off in P&L A/c was reported in financials, however, same was inadvertently left to be added back to net loss before tax while making tax computation. This error was only a computation error made in the return of income which occurred due to overlooking contents of the profit and loss account. The contents of financial statements did not conceal any particulars. Also assessee had not, in any way, taken any benefit by carrying forward a higher loss and, therefore, AO was not justified in levying penalty.

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

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13



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