Gayathri Venugopalan, Gurgaon vs Assessee

This appeal by the assessee is directed against the order passed by

the CIT(A) on 8.7.13 upholding the penalty of Rs.78,612/- imposed by

the AO u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also

called 'the Act') in relation to the assessment year 2008-09. ITA No.5279/Del/2013.

2. Briefly stated, the facts of the case are that the assessee filed her

return declaring income of Rs.2.86lac. During the course of assessment

proceedings, the AO observed that actual rent received came to Rs.1.29

lac from Benoy Antony, whereas, in the return, rent receipt was shown

at Rs.1,27,000/-. The assessee agreed to this mistake. The AO made net

addition of Rs.1,400/-, after allowing deduction u/s 24(a) @ 30%. The

AO further observed that as per housing loan certificate dated 30.11.10

issued by ICICI Bank, loan of purchase/construction of house property

was shown at Rs.2,04,179/-, whereas, in the return, interest was claimed

for Rs.5,29,440/-. The assessee was called upon to explain as to why the

differential amount of Rs.3,25,261/- (Rs.5,29,440-Rs.2,04,179) should

not be disallowed from the interest claimed against the house property

income. The assessee submitted that the bank for loan was transferred

from ICICI Bank to State Bank of India as per certificate issued by the

State Bank of India and further interest of Rs.72,252/- should be allowed

for the period from 15.12.07 to 31.3.08. The assessee agreed for the

disallowance of the remaining amount of interest at Rs.2,53,009/-. The

assessment was completed. The AO imposed penalty u/s 271(1)(c) with 2 ITA No.5279/Del/2013.

reference to these two disallowances, namely, addition of house property

income of Rs.1,400/- and disallowance of interest at Rs.2,53,009/-. The

ld.CIT(A) affirmed the penalty imposed by the AO at Rs.78,612/-.

3. We have heard the rival submissions and perused the relevant

material on record. In so far as the differential amount of interest to the

tune of Rs.2,53,009/- is concerned, it can be seen that during the year the

loan account was transferred from ICICI Bank to State Bank of India.

By mistake, the transfer balance of Rs.5,29,440/- was claimed by the

assessee as interest instead of a lower amount which was rightly

deductible. Similar is the position about the additional income of

Rs.1,400/- arising under the head 'Income from house property.' The

assessee totaled up the credits in her bank account towards interest and

found out the same at Rs.1,27,000/-, whereas the actual amount was

Rs.1.29 lac. Here is a case of a bona fide mistakes committed by the

assessee in furnishing the return of income. The nature of mistakes

pointed out in the assessment order amply show that there was no

intention of the assessee to conceal income or furnish inaccurate

3 ITA No.5279/Del/2013.

particulars of income. Due to inadvertence, these mistakes crept in at

the time of filing the return of income. By no standard such inadvertent

mistakes call for the imposition of a penalty u/s 271(1)(c) of the Act.

The Hon'ble Supreme Court in the case of Pricewater House Coopers

Pvt. Ltd. Vs. CIT (2012) 348 ITR 306 (SC) has held that no penalty u/s

271(1)(c) can be imposed for a bona fide mistake or a normal human

error. Similar view has been taken by the Hon'ble Bombay High Court

in the case of CIT vs. Somany Evergree Knits Ltd. (2013) 352 ITR 592

(Bom). Respectfully following the above precedents, we order for the

deletion of penalty.

4. In the result, the appeal is allowed.

The order pronounced in the open court on 18.03.2015.

Sd/- Sd/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated, 18th March, 2015. dk

4 ITA No.5279/Del/2013.

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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