ACIT, Circle - 32, Kolkata, Kolkata V. H.V. Williams & Co., Kolkata

ITA 1281/KOL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87630 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-09-2011
• Court: TRIBUNAL
• Department Lawyers: SANJAYACIT LDSR
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Agreed addition; Revised return; Bonafide mistake
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HON BLE SHRI N.K.SAINI , AM & HON BLE SHRI GEORGE MATHAN, JM] I.T.A NO . 1281/ KOL/201 1 A.Y 2007 - 08 A .C.I.T ,CIRCLE - 32 KOLKATA VS. M/S. H.V WI LLIAMS & CO. PAN: AABFH 6460N [ APPELLANT ] [ R RESPONDENT ] APPELLANT /DEPARTMENT BY : SHRI SANJAY,ACIT/ LD/SR.DR RESPONDENT BY : SHRI S UBASH AGARWAL , ADVOCATE, LD.AR DATE OF HEARING : 27 - 01 - 2015 DAT E OF PRONOUNCEMENT: 30 - 01 - 2015 ORDER SHRI N.K. SAINI , ACCOUNTANT MEMBER TH IS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 24/07/2011 OF CIT(A), XIX , KOLKATA FOR THE ASSESSMENT YEAR 200 7 - 08 . 2. THE ONLY GROUND RAISED BY THE DEPARTM ENT READS AS UNDER: - THAT THE LD.CIT(A) HAS ERRED IN DELETING THE PENALTY U/S. 271(1)( C) OF RS.12,59,860/ - BY HOLDING THAT THE ASSESSEE HAD VOLUNTARILY ADMITTED THE MISTAKE OF INCLUSION OF PROFESSIONAL FEES IN EXEMPTED INCOME FROM MUTUAL FUND WHEN IN FACT THE AO HAD DETECTED THE SAME, WHICH WAS ADMITTED TO BY THE ASSESSEE IN AS MUCH AS THE MISTAKE WAS NOT VOLUNTARILY POINTED OUT BY THE ASSESSEE AND FURTHER BORNE OUT BY THE FACT THAT NO REVISED RETURN WAS FILED BY THE ASSESSEE ENHANCING ITS INCOME. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 24 - 10 - 2007 DECLARING TOTAL INCOME OF RS.12,23,550/ - . HOWEVER, THE ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED AT A TOTAL INCOME OF RS.59,89,670/ - IN THE ASSE SSMENT ORDER, THE AO HAS MADE THE ADDITIONS OF RS.34,66,017/ - ON ACCOUNT OF PROFESSIONAL INCOME AND RS.2,76,893/ - ON ACCOUNT OF DISALLOWANCE OF PARTNERS SALARY. THE AO HAS MADE THE DISALLOWANCE U/S. 14A OF THE I.T ACT 1961 (HEREINAFTER REFERRED TO AS ACT) AMOUNTING TO RS.10,23,474/ - . HOWEVER, THE AO HAS INITIATED THE PENALTY PROCEEDINGS U/S. 271( 1) ( C) OF THE ACT FOR THE ADDITIONS MADE ON ACCOUNT OF PROFESSIONAL INCOME OF RS.34,66,017/ - AND DISALLOWANCE OF PARTNERS SALARY AMOUNTING TO RS.2,76,893/ - . THE AO LEVIED THE IMPUGNED PENALTY U/S. 271(1)( C) OF THE ACT BY OBSERVING THAT THE AMOUNT OF RS.34,66,017/ - HAD NO RELATION TO MUTUAL FUNDS AT ALL AND WERE ACTUALLY RECEIPTS FROM PROFESSIONAL SERVICES. HE ALSO OBSERVED THAT THERE WAS NO PROVISION IN THE PARTNERSHIP DEED RELATING TO PAYMENT OF SALARY/COMMISSION TO THE PARTNERS AND T HE ASSESSEE HAD ADMITTED THIS FACT, ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 2 BUT ATTRIBUTED IT TO AN ERROR OF THE ACCOUNTANT. HE ALSO OBSERVED THAT EVEN BY THE MOST BENEVOLENT INTERPRETATION THE RROR REVEALS A C ASUAL AND IRRESPONSIBLE ATTITUDE TOWARDS TAX ACCOUNTING AND INDICATES A DELIBERATE ATTEMPT AT CONCEALING TAX LIABILITY. ACCORDINGLY , HE LEVIED THE PENALTY OF RS.12,59,860/ - U/S. 271(1)( C) OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD.CIT(A) AND SUBMITTED THAT ALL THE MATERIAL AND PRIMARY FACTS & EVIDENCES RELEVANT FOR THE PURPOSE OF ASSESSMENT WERE TRULY AND FULLY DISCLOSED BY THE ASSESSEE . IT WAS FURTHER SUBMITTED THAT THE INCLUSION OF PART OF PROFESSIONAL INCOME UNDER THE HEA D I NCOME FROM MUTUAL FUND AND CLAIM OF PARTNERS REMUNERATION WERE BONAFIDE MISTAKES. IT WAS STATED THAT THE ASSESSEE HAD NO INTENTION EITHER TO CONCEAL THE PARTICULARS OF INCOME OR FURNISHING ANY INACCURATE PARTICULARS OF SUCH INCOME. HOWEVER, THE AO HAS NEITHER CONSIDERED THE SUBMISSIONS OF THE ASSESSEE OBJECTIVELY NOR TRIED TO ESTABLISH THE TRUE NATURE OF THE MISTAKE DONE BY THE ASSESSEE S ACCOUNTANT. IT WAS FURTHER STATED THAT THE PROFESSIONAL INCOME OF R S.34,66,017/ - WAS FOUND TO HAVE BEEN INCL UDED WITH TH E INCOME UNDER THE HEAD INCOME FROM MUTUAL FUND, WHICH WAS EXEMPT FROM TAX. HOWEVER, THE REASONS FOR HAPPENING SUCH A MISTAKE WAS THAT THE ASSESSEE MAINTAINED ITS BANK ACCOUNT WITH STANDARD CHARTERED BANK , AL L THE DEPOSITS AS WELL AS THE WIT HDRAWALS WERE MADE INTO AND THROUGH THE SAID BANK ACCOUNT. IT WAS FURTHER SUBMITTED THAT BOTH THE RECEIPTS IN THE NATURE OF PROFESSIONAL INCOME AND INCOME FROM MUTUAL FUNDS WERE DEPOSITED INTO THE ABOVE MENTIONED ACCOUNT , WHICH WAS SUBMITTED TO THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS. IT WAS EMPHASIZED THAT THE ENTRIES OF BOTH THE INCOME I.E THE PROFESSIONAL INCOME AND THE MUTUAL FUNDS WERE PASSED BY THE ACCOUNTANT THROUGH ONLY ONE LEDGER ACCOUNT I.E. GENERAL LEDGER ACCOUNT. DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE AO ASKED FOR SUBMISSION OF DETAILS OF INCOME FROM MUTUAL FUND AND THE PROFESSIONAL INCOME. WHILE PREPARING THE DETAILS TO BE SUBMITTED BEFORE THE AO, IT WAS FOUND BY THE ASSESSEE ITSELF THAT, INADVERTENTLY, SOME OF THE PROFESSI ONAL INCOME HAS BEEN RECORDED IN THE LEDGER ACCOUNT MAINTAINED FOR THE INCOME FROM MUTUAL FUND.. IT WAS BROUGHT TO THE KNOWLEDGE OF THE AO BY THE ASSESSEE THAT THERE IS A MISTAKE IN THE CLASSIFICATION OF INCOME AND SOME OF THE PROFESSIONAL INCOME HAS BEE N INCLUDED IN THE LEDGER ACCOUNT OF INCOME FROM MUTUAL FUND, WHICH IS REQUIRED TO BE TAXED AS PROFESSIONAL INCOME. ACCORDINGLY, THE AO ADDED THE SUM OF R S.34,66,017/ - BEING A MISTAKE DETECTED AND A DMITTED BY THE ASSESSEE. IT WAS CONTENDED BY THE ASSESSEE THAT SINCE THE MISTAKE WAS DETECTED BY THE ASSESSEE WHILE FILING DETAILS BEFORE THE AO, THE AO HAD NOT ISSUED ANY SHOW - CAUSE NOTICE ETC. TO THE ASSESSEE. IT WAS ALSO CONTENDED THAT IN THE ASSESSMENT ORDER THE AO HIMSELF HAS MENTIONED THAT THERE WERE CERTAIN ERROR S IN REPRESENTATION AND COMPUTATION, WHICH WERE ADMITTED BY THE ASSESSEE. IT WAS SUBMITTED ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 3 THAT EVEN IN THE PENALTY ORDER, THE AO HAS MENTIONED THAT THE ERROR COMMITTED BY THE ASSESSEE REVEALS ITS CASUAL AND IRRESPONSIBLE ATTITUDE TOWARDS TA X ACCOUNTING. THEREFORE, IT COULD NOT LEAD TO THE CONCLUSION THAT THE ASSESSEE INTENTIONALLY HAS COMMITTED SUCH MISTAKES AND THAT IT HAS CONCEALED THE INCOME OR FILE D INACCURATE PARTICULARS OF ITS INCOME. IT WAS FURTHER STATED THAT DURING THE PENALTY PR OCEEDINGS AN EXPLANATION WAS OFFERED BEFORE THE AO , WHICH WAS NOT FOUND TO BE FALSE OR NOT BONAFIDE. 5. WITH REGARD TO THE DISALLOWANCE OF PARTNERS REMUNERATION OF R S.2,76,893/ - , IT WAS SUBMITTED BY THE ASSESSEE THAT DURING THE COURSE OF ASSESSMENT PROCE EDINGS, IT WAS EXPLAINED BEFORE THE AO THAT THE REQUIRED PROVISION OF PARTNERS REMUNERATION WAS IN THE ORIGINAL PARTNERSHIP DEED. THIS FACT WAS BROUGHT TO THE KNOWLEDGE OF THE AO THAT THE ASSESSEE WAS A PARTNERSHIP FIRM WHERE ORAL AGREEMENT WAS ALSO VALID FOR THE CONDUCT OF BUSINESS OF THE FIRM. IT WAS SUBMITTED THAT THE DISALLOWANCE OF RS.2,76,893/ - WAS MADE BY THE AO , WHICH WAS NOT FURTHER CONTESTED BY THE ASSESSEE TO BUY PEACE OF MIND. HOWEVER, THE DISALLOWANCE MADE BY THE AO COULD NOT BE EQUATED WITH THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULAR OF INCOME. 6 . THE LD.CIT(A) AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT IN THE PROFIT & LOSS A/C THE ASSESSEE HAD CREDITED A SUM OF RS.50,29,581/ - UNDER THE HEA D INCOME FROM MUTUAL FUND . HOWEVER, IN THE SAID SUM AN INCOME OF RS.34,66,017/ - WAS INCLUDED, WHICH WAS ACTUALLY THE PROFESSIONAL INCOME. THE SAID INCOME WAS ADDED BY THE AO AS INCOME FROM PROFESSION AND ACCORDINGLY, THE INCOME OF MUTUAL FUND WAS REDUCE D. THE LD.CIT(A) POINTED OUT T HAT DURING ASSESSMENT AND PENALTY PROCEEDINGS THE ASSESSEE SUBMITTED THAT THE MISTAKE IN CLASSIFICATION OF INCOME HAS BEEN COMMITTED BY THE ASSESSEE S ACCOUNTANT. HOWEVER, THE AO DID NOT ACCEPT THE SAID CONTENTION AND LEVIE D THE PENALTY U/S. 271(1)( C) OF THE ACT. HE OBSERVED THAT NOWHERE IT WAS MENTIONED THAT THE MISTAKE OF INCLUSION OF SOME PROFESSIONAL INCOME WITH THE INCOME FROM MUTUAL FUNDS WAS DETECTED BY THE AO AND IT WAS A FACT ON RECORD THAT WITH REGARD TO THE SA ID INCOME NO EXPLANATION ETC. WAS SOUGHT FOR BY THE AO . HENCE, THE CONTENTION OF THE ASSESSEE THAT THE SAID MISTAKE WAS DETECTED BY THE ASSESSEE ITSELF IN SUBMITTING THE DETAILS COULD NOT BE IGNORED. THE LD.CIT(A) HAS POINTED OUT THAT AT THE TIME OF PENAL TY PROCEEDINGS, THE ASSESSEE REITERATED ITS SUBMISSION THAT THE MISTAKE OF INCLUSION OF CERTAIN AMOUNT OF PROFESSIONAL INCOME IN THE LEDGER ACCOUNT OF INCOME FROM MUTUAL FUND WAS DUE TO MISTAKE OF ASSESSEE S ACCOUNTANT. THE SAID MISTAKE WAS A BONAFIDE MI STAKE AND NOT AN INTENTIONAL ONE. THE LD.CIT(A) WAS OF THE VIEW THAT MERELY FOR THE REASON THAT CERTAIN ADDITIONS/DISALLOWANCES HAD BEEN MADE IN THE ASSESSMENT, IT COULD NOT LEAD TO CONCLUDE THAT THE ASSESSEE HAS CONCEALED ITS PARTICULARS OF ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 4 INCOME OR FIL ED INACCURATE PARTICULARS OF INCOME. THE LD.CIT(A) HAS REFERRED TO THE FOLLOWING CASE LAWS: - A . ITO VS. ROBORANT INVESTMENT (P) LTD 7 SOT 181(MUM) B . ACIT VS. VIP INDUSTRIES LTD 122 TTJ 289 (MUM) C . ITO VS. PARIKH INVESTMENT & DEVELOPMENT P.LTD 43 SOT 53 7 (MUM) D . CIT VS. TANIA INVESTMENTS P.LTD 322 ITR 394(BOM) E . DCIT VS. M/S. SREE GOURI SHANKAR JUTE MILLS ITA NO.945/KOL/2010 DT 21/4/2011 F . KANBAY SOFTWARE VS. DCIT ITA NO.300/PN/07 DT 28.4.09,ITAT,PUNE THE LD.CIT(A) ALSO OBSERVED THAT THE HON BLE SC IN T HE CASE OF DHARM ENDRA TEXTILES PROCESSORS, HAS HELD THAT PENALTY U/S. 271(1)( C) IS A CIVIL LIABILITY AND WILLFUL CONCEALMENT AND MENS REA ARE NOT ESSENTIAL INGREDIENTS FOR IMPOSING PENALTY CANNOT BE READ TO MEAN THAT IN ALL CASES WHERE ADDITION IS CON FIRMED, PENALTY SHALL MECHANICALLY FOLLOW. IF PENALTY IS IMPOSED UNDER SUCH CIRCUMSTANCES ALSO THERE WILL REMAIN NO COURSE OPEN TO AN ASSESSEE TO RAISE DISPUTED CLAIMS AND AS SUCH PROPOSITION IS BEYOND RECOGNIZED CANNONS OF LAW. 7. THE LD.CIT(A) HELD THA T IN CASE OF THE ASSESSEE THE AO HAD MADE THE ADDITION ON ACCOUNT OF PROFESSIONAL INCOME AND MADE DISALLOWANCE ON PARTNERS SALARY. IT WAS EXPLAINED BEFORE THE AO THAT THE MISTAKE W AS COMMITTED BY THE ASSESSEE S ACCOUNT BY WRITING THE BOOKS AND SUCH MISTA KE WAS DETECTED AND DISCLOSED BY THE ASSESSEE TO THE AO WHILE FILING THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS. THE EXPLANATION AS OFFERED BY THE ASSESSEE WAS NOT FOUND TO BE FALSE OR INTENTIONAL , T HEREFORE, THE PENALTY U/S. 271(1) (C) OF THE ACT LEVIED BY THE AO WAS NOT JUSTIFIED . HE DIRECTED TO DELETE THE SAME. NOW, T HE DEPARTMENT IS IN APPEAL BEFORE US. 8 . THE LD.DR HAS STRONGLY SUPPORTED THE ORDER OF THE AO . HE FURTHER SUBMITTED THAT HAD IT WAS NOT A CASE OF THE SCRUTINY , THE INCOME MIGHT HAVE ESCAPED. IT WAS ALSO SUBMITTED BY HIM THAT THE INCOME FROM MUTUAL FUNDS WAS WRONGLY CLAIMED BY THE ASSESSEE AS EXEMPT. I NCOME WHICH , IN FACT, WAS INCOME FROM PROFESSION , BUT T HE ASSESSEE DID NOT FILE ANY REVISED RETURN EVEN AFTER KNOWING OF THE SAID MISTAKE. IT WAS ALSO SUBMITTED THAT EVEN IF THE AGREED ADDITION WAS MADE, THE PENALTY U/S. 271(1) (C ) WAS ALSO LEVIABLE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE SC IN THE CASE OF MAK DATA P.LTD VS. CIT,II IN CIVIL APPEAL NO.9772 OF 2013[AR ISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.18389 OF 2013. COPY OF THE SAID ORDER IS FURNISHED. 1 0 . IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPU GNED ORDER PASSED BY THE LD.CIT(A). HE ALSO SUBMITTED THAT IN THE ASSESSMENT ORDER , THE AO NOWHERE STATED THAT PENALTY ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 5 WAS LEVIED EITHER FOR CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IT WAS EMPHASIZED THAT THE ASSESSEE ITSELF DETECTED THE ERROR COMMITTED BY THE ASSESSEE S ACCOUNTANT AND OFFERED FOR TAXATION THE INCOME FROM PROFESSION, WHICH WAS WRONGLY TAKEN BY THE ACCOUNTANT BY MISTAKE AS INCOME FROM MUTUAL FUNDS. HE FURTHER STATED THAT THE EXPLANATION OF THE ASSESSEE BEFORE THE AO WAS A BONAFIDE. THEREFORE, THE PENALTY U/S. 271(1)( C ) OF THE ACT WAS NOT JUSTIFIED . IT WAS ALSO STATED THAT IN THE ORIGINAL PARTNERSHIP DEED THERE WAS A PROVISION FOR PAYMENT OF REMUNERATION TO THE PARTNERS AND ONLY ON THAT BASIS THE ASSESSEE CLAIMED THE REMUNERATION PAID TO PARTNERS BUT TO REDUCE THE LITIGATION, THE ASSESSEE HAS ALSO OFFERED FOR TAXATION THE DISALLOWANCE MADE ON A CCOUNT OF PARTNERS REMUNERATION. SO IT COULD BE A GOOD CASE FOR MAKING THE ADDITION, BUT NOT FOR LEVYING OF PENAL TY U/S 271(1) ( C) OF THE ACT. RELIANCE WAS PLACED ON THE DECISION /ORDER DATED 17 - 01 - 2014 OF THE ITAT KOLKATA, BENCH C , KOLKATA IN ITA NO.421/KOL/2012 FOR THE A.Y 1996 - 97 IN THE CASE OF M/S. UNIPACK AIR EXPRESS (P) LTD VS. ITO, W 9(1), KOL, WHEREIN THE T RIBUNAL HAS HELD AS UNDER: 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME AND THE PENALTY ORDER. WE NOTED THAT U/S. 271(1) ( C) OF THE ACT THE PENALTY CAN BE IMPOSED EITHER FOR FILING INACCURATE PARTICULARS OR CONCEALING PARTICUL AR OF INCOME. THE AO IS REQUIRED TO SATISFY THE CHARGE FOR WHICH THE PENALTY IS IMPOSED. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS THE PENALTY ORDER. WE NOTED THAT THE AO HAS NOT INITIATED PENALTY IN RESPECT OF ANY SPECIFIC CHARGE NOR SPECIFIED ANY PARTICULAR CHARGE WHILE IMPOSING THE PENALTY ON THE ASSESSEE. THE AO SIMPLY OBSERVED THAT THE PENALTY IS LEVIABLE U/S. 271(1) ( C) . THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. ATUL MOHAN BINDAL 317 1(SC) HAS LAID DOWN THAT BEFORE IMPOSING THE P ENALTY BY THE AO THE REVENUE MUST COMPLY WITH THE CONDITIONS AS SPECIFIED U/S. 271( 1) ( C) OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON BLE SUPREME COURT IN THE CASE OF DILIP N.SHROFF VS. JCIT AND ANOTHER 291 ITR 519(SC) . THE HON BLE GUJARAT HIGH CO URT IN THE CASE OF NEW SRATHIA ENGG. CO VS. CIT 282 ITR 642 HAS LAID DOWN THAT ORDER OF PENALTY MUST CLEARLY STATE WHETHER IT IS FOR CONCEALMENT OR FOR FURNISHING INACCURATE PARTICULARS. 3.1 IN VIEW OF THE AFORESAID DECISION WE ARE OF THE VIEW THAT THE REV ENUE MUST BRING OUT SPECIFIC CHARGE FOR WHICH THE PENALTY U/S. 271(1) (C ) OF THE ACT HAS TO BE IMPOSED. SINCE NO SPECIFIC CHARGE HAS BEEN BROUGHT OUT AGAINST THE ASSESSEE, WE THEREFORE DELETE THE PENALTY IMPOSED U/S. 271(1) ( C) OF THE ACT. 10 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE ITSELF CAME TO KNOW THAT ITS ACCOUNTANT HAS COMMITTED A MISTAKE AND CONSIDERED THE PROFESSIONAL INCOME OF RS.34,66, 0 17 / - UNDER THE HEAD INCOME FROM MUTUAL FUNDS, WHICH WAS CLAIMED AS EXEMPT. ACCORDINGLY, THE AO DISALLOWED AND ADDED BACK THE SUM OF RS.34,66,017/ - TO THE INCOME OF THE ASSESSEE . THE EXPLANAT ION OF THE ASSESSEE WAS THAT THE ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 6 SUCH MISTAKE WAS ATTRIBUTABLE BEING AN ERROR OF THE ACCOUNTANT AND IT WAS NOT MALAFIDE. THE SAID EXPLANATION WAS NOT REBUTTED. 11. IN THE PRESENT CASE, T HE AO IN THE PENALTY ORDER U/S. 271(1) ( C) OF THE ACT DATED 30 - 06 - 20 10 HIMSELF OBSERVED THAT THE ERROR REVEALS A CASUAL AND IRRESPONSIBLE ATTITUDE TOWARDS TAX ACCOUNTING. SIMILARLY, THE ASSESSEE DEBITED A SUM OF R S.2,76,893/ - AS PARTNERS SALARY ON THE BASIS OF ORIGINAL PARTNERSHIP DEED. BUT THE AO ON EXAMINATION OF THE SA ME FOUND THAT THERE WAS NO SUCH PROVISION IN THE CURRENT DEED . THE ASSESSEE IS NOT CONTESTED THE SAID ADDITION. THEREFORE, THE ADDITION S MADE BY THE AO WAS JUSTIFIED. HOWEVER, IT IS WELL SETTLED THAT THE ASSESSMENT AND THE PENALTY PROCEEDINGS ARE DIFFER ENT AND DISTINCT PROCEEDINGS AND EVEN WHEN ADDITION IS MADE FOR CERTAIN REASONS , IT CANNOT BE SAID THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME OR CONCEALED THE INCOME . ON A SIMILAR ISSUE THE HON BLE SC IN THE CASE OF PRICE WATERHOUS E COOPERS PVT. LTD VS. CIT REPORTED IN 348 ITR 306(SC) HAS HELD AS UNDER: - THAT THE FACTS OF THE CASE WERE PECULIAR AND SOMEWHAT UNIQUE . NOTWITHSTANDING THAT THE ASSESSEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A SILLY MISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONG WITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION PAYMENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT INDICATED THAT THE ASSESSEE MAD E A COMPUTATION ERROR IN ITS RETURN OF INCOME. THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THERE WAS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOME OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. APART FROM THE FACT THAT THE ASSESSEE D ID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASESSING OFFICER WHO FRAMED THE ASSESSMENT ORDER. ALL THAT HAD HAPPENED WAS THAT THROUGH A BONA FIDE AND INADVERTENT ERROR, THE ASSESSEE WHILE SUBMITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THE ASSESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. ON THE PECULIAR FACTS OF THIS CASE, THE IMPOSITION OF PENALTY ON THE ASSESSEE WAS NOT JUSTIFIED. 1 2 . IN THE PRESENT CASE ALSO THE MISTAKE WAS COMMITTED BY THE ACCOUNTANT OF THE ASSESSEE. EVEN IT WAS NOT NOTICED BY THE AO , AND THE ASSESSEE ITSELF DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS WHILE PREPARING THE DETAILS FROM ITS LEDGER ACCOUNTS CAME TO KNOW THE SAID MISTAKE HAD BEEN COMMITTED BY THE ACCOUNTANT AND PROPOSED FOR ADDITION. THEREFORE , THROUGH A BONAFIDE AND IN ADVERTENT ERROR THE ASSES SEE CLAIMED THE INCOME AS EXEMPT AND WRONGLY PROVIDED FOR PARTNERS SALARY . BUT THE SUBMISSIONS OF THE ASSESSEE WAS THAT THE ERROR OCCURRED BY A MISTAKE OF ITS ACCOUNTANT, WHO TREATED THE SAID PROFESSIONAL INCOME AS INCOME FROM MUTUAL FUNDS AND T HE SAL ARY WAS CLAIMED ON THE BASIS OF THE CLAUSE MENTIONED IN THE ORIGINAL PARTNERSHIP DEED WAS NOT FOUND TO BE FALSE. WE, THEREFORE, KEEPING IN VIEW OF THE RATIO LAID DOWN ITA NO .1281/KOL/2011 - A - AM M/S. H.V WILLIAMS & CO. 7 BY THE HON BLE SUPRE ME COURT IN THE CASE OF PRICE W ATERHOUSE COOPERS PVT. LTD (SUPRA) ARE OF THE VIEW THAT THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE PENALTY SO LEVIED BY THE AO. ACCORDINGLY , WE UPHOLD THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. 1 3 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 - 01 - 2015 SD/ - SD/ - [ GEORGE MATHAN ] [ N.K.SAINI ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 - 01 - 2015 COPY OF THE ORDER FORWARDED TO: 1 . /APPELLANT - A CIT,CIR - 32 , KOLKATA . 2 RESPONDENT : M/S. H.V WILLIAMS & CO. 3 . CIT, 4 . CIT(A), 5 . DR, KOLKATA BENCHES, KOLKATA *PP/SPS [ / TRUE COPY] / BY ORDER, /ASSTT REGISTRAR