The Chhattisgarh High Court has issued the clarification on the penalty under Section 271(1)(c) while emphasizing on voluntary surrender and bonafide mistake.
The bench of Justice Sanjay K. Agrawal and Justice Deepak Kumar Tiwari has observed that once the Tax Audit Report conducted under Section 44AB of the IT Act was filed and it was uploaded in the Income Tax Portal along with the return of income, there is no question of submission of any inaccurate particulars and no question of concealment of income by the assessee.
The bench added that the mismatch in the figures of book profit was a case of feeding mistake and data transmission error and there was no mala fide intention on the part of the appellant being a Government entity. As such, the order of the CIT (Appeals) could not have been interfered with by the ITAT only on the ground that in the revised return correct figures were not made before the Assessing Officer.
The bench stated that correct figures provided were not brought to the notice of the Assessing Officer while filing return and revised return and ultimately, on 22-11-2019, it is the appellant/assessee itself who brought correct figures on record informing the AO about the difference in the figures of book profit attributing the same to be inadvertent data feeding mistakes in the return filed, therefore, the assessee’s case will not fall within the mischief of Section 271(1)(c) of the Income Tax Act.
The assessee/appellant is a Public Limited Company and formulated under the provisions of the Electricity (Supply) Act, 1948. The appellant Company holds the status of a ‘Government Company’ under the provisions of Section 617 of the erstwhile Companies Act, 1956, now Section 2(45) of the Companies Act, 2013.
The assessee is in the business of providing/rendering extra high voltage power transmission services through its voltage power sub-stations (132 KV & above) and transmission lines throughout the State of Chhattisgarh.
The appellant filed its return of income. The assessee returned the submission informing the AO about not disallowing the provision for gratuity while computing business income and accordingly, provided a revised computation of total income with revised income tax return form with corrected figures of book profit for the purposes of computation of MAT under Section 115JB of the Income Tax Act Act.
Ultimately, the Assessing Officer by its order passed assessment order under Section 143(3) of the Income Tax Act acceding to the claim of the appellant to allow the revised figures of book profit, but AO was of the view that the appellant had not made true and correct disclosure and therefore penalty proceedings under Section 271(1)(c) of the Income Tax Act were initiated against the appellant for furnishing inaccurate particulars of the income, which the appellant refuted and filed response stating that variation in the figure of book profit has occurred due to inadvertent data feeding mistake in the return of income hence, the penal proceedings initiated under Section 271(1)(c) of the Income Tax Act be dropped.
The AO imposed a penalty of Rs. 2,72,92,117 on the appellant under Section 271(1)(c) of the IT Act alleging that the appellant has tried to furnish inaccurate particulars of income and thereby sought to evade tax.
The ITAT restored the order of penalty on account of variation in the book profit to the extent of ₹ 8.84 crores (approx.), which the appellant assessee has called in question by way of the appeal.
The appellant contended that already furnished the tax audit report in Form No.3CA/3CD conducted under Section 44AB of the Icome Tax Act reporting the net profit before tax at Rs. 3574.90 lakhs, that too before initiating the assessment proceedings and further, while making submission reiterated the same on 6-12- 2019, as such, there was bona fide act on the part of the appellant and it is only a data feeding mistake, therefore, would not fall within the mischief of Section 271(1)(c) of the Income Tax Act and as such, the order of the ITAT deserves to be set aside and the order of the CIT (Appeals) be restored.
The court quashed the order passed by the ITAT over turning the order passed by the CIT (Appeals).
Case Details
Case Title: Chhattisgarh State Power Transmission Company Versus DCIT
Case No.: TAXC No. 91 of 2024
Date: 09/04/2025
Counsel For Appellant: Nikhilesh Begani
Counsel For Respondent: Ajay Kumrani
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