By TIOL News Service

CHANDIGARH, JUNE 01, 2016: THE issue is - Whether if Revenue's counsel has failed to add back the sum debited to P&L A/c which were inadmissible, such an error cannot be attributed to assessee. YES is the verdict.

Facts of the case

The assessee is a Cooperative Society and is engaged in providing assistance to the various member sugar mills in the State of Punjab and is receiving cess on the production of sugar. It e-filed its return of income for the assessment year 2010-11 on 28.9.2010 declaring total income at Rs. 9,77,46,340/-. The said return was processed u/s 143(1) on 7.5.2011. The case was taken up for scrutiny and notice under Section 143(2) was issued on 1.9.2011. Subsequently, questionnaire along with notice under Section 142(1) was issued on 19.4.2012. During the course of assessment proceedings, the assessee claimed expenses for capital gain tax of Rs. 2,65,03,000/- and property tax amounting to Rs. 9588/- in the profit and loss account and had not added them back in the computation of total income. Accordingly, the Assessing Officer vide order dated 28.1.2013 framed the assessment at a total income of Rs. 12,42,58,928/- by making additions of Rs. 2,65,03,000/- on account of capital gain tax and Rs. 9588/- on account of property tax. On both the additions, penalty proceedings u/s 271(1)(c) were also initiated for furnishing inaccurate particulars of income. AO levied penalty amounting to Rs. 61,13,801/- u/s 271(1)(c). On appeal, CIT(A) allowed the appeal and deleted the penalty u/s 271(1)(c) levied by the Assessing Officer. Against the order, Annexure A-3, the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 26.10.2015 upheld the order of the CIT(A) and dismissed the appeal. Hence, the present appeal by the revenue.

Held that,

++ the CIT(A) while cancelling the penalty u/s 271(1)(c) held that the counsel has explained that the income tax return of the appellant was filed by the Advocate, who had not added back the advance tax paid on capital gains and property tax, in the statement of income. From the documents filed by counsel, it is evident that the Counsel had filed the income tax return and had not added back the impugned amounts debited to the profit & loss account, which were inadmissible deductions. Thus, the mistake of not adding back the impugned amounts in the statement of income was of the then Counsel and moreover, it cannot be said that anyone had benefitted by not adding back the impugned amounts, since the appellant cooperative society is an undertaking of Government of Punjab. The explanation furnished by the appellant is bonafide and so the impugned penalty levied is cancelled. On appeal by the revenue, the Tribunal had affirmed the said findings of the CIT(A) by holding that the assessee had submitted revised computation during the course of assessment proceedings and there was no intention to conceal the income. Further, the Tribunal held that the assessee had duly paid tax on the amounts of capital gains tax and property tax suo motu and due to inadvertent mistake on the part of the counsel of the assessee, the amount of capital gains tax and property tax paid were not added back resulting into refund. The Tribunal had observed that by not adding back the amount, no one had been benefitted as the assessee is an undertaking of Government of Punjab. No illegality or perversity could be demonstrated by learned counsel for the revenue that the findings of the CIT(A) and the Tribunal were erroneous or perverse in any manner. In view of the above, no scope for interference by this Court is made out so as to take a different view expressed by the CIT(A) and affirmed by the Tribunal. Thus, no substantial question of law arises. The appeal stands dismissed.

(See 2016-TIOL-1040-HC-P&H-IT)