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Provisions of levy of penalty u/s 271(1)(c) of the Income Tax Act

Court :
ITAT Chandigarh

Brief :
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) -2, Chandigarh [ ( in short the ‘Ld. CIT(A) ] dated 10.01.2018 relating to assessment year 2013-14, passed u/s 250(6) of the of the Income Tax Act , 1961.

Citation :
ITA No.347/Chd/2018



ITA No.347/Chd/2018

Assessment Year : 2013-14

M/s Core Metal Krafts Ltd.,
SCO 36, Sector 26,


The Assistant Commissioner
of Income Tax,
Circle 5(1), Chandigarh.

Assessee by : Shri Sudhir Sehgal, Adv.
Revenue by : Smt.Meenakshi Vohra, Addl. CIT

Date of Hearing : 25.08.2021

Date of Pronouncement : 04.10.2021

(Hearing through webex)


The Ld. Assessing Officer's and Worthy CIT (A)'s he Ld. AO grossly erred in imposing penalty u/s 271(l)(c) of
the IT Act, 1961 on the addition of Rs.4,79,9867- by invoking the provisions of section 43B of the Act. The
non adding back of bonus of Rs 2,31,778/- was completely a clerical error by the accountant of the assessee and no penalty can be made on the same as he same was clearly reported in the tax audit report (Form 3 CD) of assessee. The same issue was also discussed in the case of price Waterhouse coppers Vs. CST SC and decided in favour of assessee. Further the addition of Ex-gratia of Rs 2,48,208/- falls under purview of Employee benefit expenses and cannot be regarded as an item falling under section 43B of the Act. OL4.

2. The arguments of the Ld.Counsel for the assessee against the levy of penal ty for the aforesaid was that al l
particulars relating to the above had been duly disclosed and it was not a case of furnishing of inaccurate particulars
or concealment of income. That the disallowance made u/s 43B of the Act had been suffered on account of invocation of specific provisions of the Act . That additions relating to difference in interest income reported in Form 26AS and
that disclosed by the assessee was a bonafide mistake on the part of the assessee since Form 16A had not been
received from the department .

3. The facts of the present case we find that it is not the case that the particulars of income in relation to which penal ty has been levied were either inaccurate or they were concealed. The employers contribution to ESI/PF disallowable u/s 43 B of the Act stood disclosed in the tax audit report , interest on TDS & income tax refund, and ESI /Income Tax penalty all stood duly disclosed by the assessee. I t is just that while certain disallowances/additions, i .e. ESI & PF and Interest on refund & TDS and difference in interest receipts reflected in Form 26AS and that returned, were inadvertently missed to have been made by the assessee who surrendered the same when it was made aware during scrutiny assessment.

4. In the result , the appeal of the assessee is allowed.
Order pronounced on 4th October, 2021.

Please find attached the enclosed file for the full judgement


Poojitha Raam
on 15 October 2021
Published in Income Tax
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