Mangalam Drugs & Organics Ltd, Mumbai vs Assessee
- CitationI.T.A. No. 3196/Mum/2013
Ratio decidendi
The rule this decision rests on
The protection against penalty for a genuine mistake under section 273B does not extend to a later assessment year where the discrepancy was first detected in the assessee's assessment for an earlier year only after the date on which the return for the later year was filed; the assessee cannot then plead genuine mistake or omission in respect of that later return, since the earlier detection should have prompted greater care in preparing it. An error in a return prepared by tax consultants or tax auditors is not, as a general proposition, excused as a genuine mistake attributable to them; whether the plea of honest mistake succeeds depends on the nature of the discrepancy and the surrounding circumstances, and the assessee, who verifies the return, bears the onus of proving it.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
ी डी. म मोहन, उपा य एवं ी संजय अरोड़ा, लेखा के सम ।
BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM
आयकर अपील सं./I.T.A. No. 3196/Mum/2013 ( नधा रण वष / Assessment Year: 2005-06)
Mangalam Drugs & Organics Ltd. Asst. CIT-4(2), 292, Princess Street, बनाम/ M. K. Marg, Second Floor, Near Flyover, Mumbai-400 020 Vs. Mumbai-400 002
थायी ले खा सं . /जीआइआर सं . /PAN/GIR No. AAACM 7880 P (अपीलाथ" /Appellant) : (#$यथ" / Respondent)
अपीलाथ" क% ओर से / Appellant by : Shri M. Subramanian
#$यथ" क% ओर से/Respondent by : Shri Love Kumar
सनु वाई क% तार+ख / : 05.02.2015 Date of Hearing घोषणा क% तार+ख / : 10.02.2015 Date of Pronouncement
आदे श / O R D E R Per Sanjay Arora, A. M.:
This is an Appeal by the Assessee directed against the Order by the Commissioner of Income Tax (Appeals)-8, Mumbai ('CIT(A)' for short) dated 12.02.2013, contesting the levy of penalty u/s.271(1)(c) of the Income Tax Act, 1961 ('the Act' hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated 20.03.2012.
2. The only issue arising in this appeal is validity or otherwise in law of the levy of penalty on the assessee u/s. 271(1)(c) of the Act in the sum of Rs.20,888/-, since confirmed by the ld. CIT(A), in the facts and circumstances of the case.
2 ITA No. 3196/Mum/2013 (A.Y. 2005-06) Mangalam Drugs & Organics Ltd. vs. Asst. CIT
3. Explaining the facts of the case, it was submitted by the ld. Authorized Representative (AR), the assessee's counsel, that the only disallowance made while framing the assessment u/s. 143(3) on 11.12.2007 by the Assessing Officer (A.O.), i.e., on which penalty has been levied, is the claim for depreciation on electrical fittings; having been claimed @ 25%, as against the eligible rate of 15%. This was clearly an omission, and therefore the mistake admitted on the discrepancy being pointed out by the A.O. in the assessment proceedings, explaining the underlying reason. Prior to A.Y. 2003-04, electrical fittings were eligible for depreciation at the general rate applicable to plant and machinery, and which amendment was lost sight of while preparing the return of income for the current year. In fact, he would further submit, the figure of depreciation as worked out by the tax auditors was adopted, so that the mistake had in fact occurred at the end of the auditors themselves. A case of bona fide mistake, therefore, ought to exclude penalty. On further enquiry by the Bench, he however confirmed that this issue had also arisen in the assessee's case for A.Y. 2003-04, whereat the Tribunal had cancelled the penalty, allowing the assessee the benefit of doubt in-as-much as that was the first year of the amendment, which therefore had escaped notice.
The ld. Departmental Representative, on the other hand, would submit that the foregoing itself proves that the assessee had made a conscious claim, or, in any case, had not acted with diligence, not correcting itself even after its assessment for the earlier year.
4. We have heard the parties, and perused the material on record.
In our view, the protection with regard to a genuine mistake, which the law provides for u/s.273B, and which was granted by the tribunal while deciding the assessee's appeal for A.Y. 2003-04, shall apply for the current year only where the detection of the discrepancy by the A.O. during the assessment proceedings for A.Y. 2003-04 was subsequent to the date of filing the return for the current year, i.e., 29.10.2005. The discrepancy having been surfaced at that time, no plea with regard to a genuine mistake or an omission could be taken by the assessee subsequently. Rather, that should have operated as a wake-up call for being more attentive and adopting a more 3 ITA No. 3196/Mum/2013 (A.Y. 2005-06) Mangalam Drugs & Organics Ltd. vs. Asst. CIT
careful approach in preparing its tax return, i.e., even generally. As regards the plea of a 'mistake' by the tax auditors, the same cannot in our view be taken in a generalized manner, absolving the assessee; the returns in almost cases being, or could be said to be, prepared by the tax consultants. The verification to the return is of the assessee and, besides, the nature of the discrepancy and the attendant circumstances are relevant factors, so that the matter becomes factual and no proposition, apart from a saving for a honest mistake, would obtain.
On such a view being expressed by the Bench during hearing, the ld. AR would submit that the relevant date i.e., when the discrepancy was detected for the first time in the assessee's assessment for A.Y. 2003-04, is not at hand, and shall be supplied later. The copy of assessment order, submitted subsequently, however, does not throw light in the matter, i.e., as to the date of the said detection. The basis of our decision being clear, want of relevant material should not detain us further. Accordingly, in our clear view, the assessee would be entitled to an acceptance of its' plea of a genuine mistake as being responsible for furnishing inaccurate particulars of income and, thus, saving from the impugned penalty, if the stated error had come to light, admittedly during the course of assessment proceedings in its case for A.Y. 2003-04, subsequent to the date of the filing the return, i.e., 29.10.2005. The onus to prove the same shall be on the assessee, who shall be given due opportunity to explain its case on this parameter before the A.O., who shall decide accordingly, issuing a definite finding/s of fact, one way or the other. We decide accordingly.
5. In the result, the assessee's appeal is allowed for statistical purposes.
प1रणामतः 3नधा51रती क% अपील सां6यक%य उ7े8य के 9लए वीकृत क% जाती है ।
Order pronounced in the open court on February 10, 2015
Sd/- Sd/-
(D. Manmohan) (Sanjay Arora) उपा य / Vice President लेखा सद य / Accountant Member मुंबई Mumbai; >दनांक Dated : 10.02.2015 4 ITA No. 3196/Mum/2013 (A.Y. 2005-06) Mangalam Drugs & Organics Ltd. vs. Asst. CIT
व.3न.स./Roshani, Sr. PS
आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ" / The Appellant
2. #$यथ" / The Respondent
3. आयकर आय?
ु त(अपील) / The CIT(A)
4. आयकर आय?
ु त / CIT - concerned
5. Bवभागीय #3त3नEध, आयकर अपील+य अEधकरण, मंब ु ई / DR, ITAT, Mumbai
6. गाड5 फाईल / Guard File आदे शानस ु ार/ BY ORDER,
उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai
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