No penalty u/s 271(1)(c) is imposable where assessee erroneously accounts provision for interest twice 

No penalty u/s 271(1)(c) is imposable where assessee erroneously accounts provision for interest twice 

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No penalty u/s 271(1)(c) is imposable where assessee erroneously accounts provision for interest twice 

Gujarat State Electricity Corporation Ltd Vs DCIT
ITA No. 1778/Ahd/2017
Short Overview of the case:
The assessee has filed return of income on 24th October, 2007 declaring total income of Rs. nil. The case was subject to scrutiny assessment.
 During the course of assessment, the AO noticed that assessee has accounted interest expenses of Rs. 11,92,00,000/- twicely.
Therefore, the same was disallowed and added to the total income of the assessee under the normal provision and in book profit u/s. 115JB of the act. The AO has also levied penalty u/s. 271(1)(c) of the act for furnishing inaccurate particulars of income.
On appeal, the issue before Tribunal was whether penalty u/s 271(1)(c) is imposable where assessee erroneously accounts provision for interest twice?
ITAT observed as under:
course of assessment, the AO noticed that assessee has accounted interest expenses twice of Rs. 11.90 crores, therefore, the same was disallowed and also levied penalty of Rs. 1,46,48,271/- u/s. 271(1)(c) of the act on the combined amount of disallowance u/s. 14A and disallowance of interest.
 After perusal of the material on record, it is undisputed fact that aforesaid expenditure was twicely reflected in the annual account of the year under consideration and during the course of assessment and appellate proceedings the assessee has brought to the notice of the lower authorities that same was rectified by showing the said expenditure as prior period income in the subsequent year.
 The assessee has also placed copy of income tax return for assessment year 2008-09 which was filed on 30th Sep, 2008 demonstrating that the same was shown as income in the subsequent year and not in Sep, 2009 as contended by Departmental Representative.
In the light of the above fact and circumstances, we have also gone through judicial pronouncements referred by the counsel decision of 322 ITR 158 (SC) Reliance Petro-Products Pvt. Ltd. & 348 ITR 306 (SC) Price Watercoopers Pvt. Ltd. wherein it is held merely because assessee had claimed expenditure which claim was not accepted or was not acceptable to revenue that by itself would not attract penalty u/s. 271(1)(c) of the act.
We have also gone through the judicial pronouncement of Price Waterhouse Coopers (P) Ltd. wherein the Supreme Court held that assessee firm filed its return of income.
It was a bonafide and inadvertent error. Assessee was not guilty of either furnishing inaccurate particulars or attempting to conceal its income, imposition of penalty was unjustified. In the light of the above facts and findings, we observed that assessee had accounted the provision for interest twice by mistake on which the Assessing Officer has levied penalty for furnishing inaccurate particulars of income.
However, it is noticed that assessee itself shown the said expenditure as income in the subsequent assessment year 2009-10 and demonstrated from the copy of return that the same was filed on 30th Sep, 2008 before detecting the discrepancy under scrutiny assessment.
Therefore, necessary correction has already been done by the assessee before detecting the mistake pointed out by the Assessing Officer in the assessment proceedings for the year under consideration.
Looking to the facts and findings of judicial pronouncements as referred above, we consider that decision of CIT(A) in sustaining the impugned penalty is not justified.
Therefore, we direct the Assessing Officer to delete the impugned penalty. Accordingly, this appeal of the assessee is allowed.

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