Income Tax Penalty Can't Be Imposed For Committing Unintentional Error In Form-16: ITAT

The appellant/assessee is an individual who filed a return declaring a total income of Rs. 5,39,360. A notice under section 143(2) of the Income Tax Act was issued seeking an explanation regarding the return of income. According to the AO, on verification of 26AS data, it was found that the assessee accepted salary income from Sesa Sterlite Ltd. and had not offered for taxation.

For not disclosing the salary in the return of income, the AO initiated penalty proceedings for furnishing inaccurate particulars. It was explained by the assessee that due to oversight, the document relating to Form 16 from Sesa Sterlite Ltd. was misplaced and it was not done intentionally. The AO added the salary income derived from Sesa Sterlite Ltd. to the total income of the assessee. The CIT (A) confirmed the order of the AO.

The assessee explained that by oversight, the salary derived from Sesa Sterlite Ltd. was not included in the return of income, but, however, in the scrutiny proceedings, it was accepted by the assessee to be his income and he paid taxes.

The department supported the order of CIT (A) in confirming the penalty that the assessee intentionally did not disclose the salary income.

The issue raised was whether the CIT (A) was justified in confirming the penalty levied under section 271(1)(c) of the Income Tax Act, 1961.

The ITAT observed that the assessee did not suppress the fact that no income was incurred as such. However, it was reflected in Form 26AS data, which was otherwise salary data and TDS deductions are available for examination by the AO.

"Therefore, in our considered opinion, as contended by the AO, it was not the furnishing of inaccurate particulars but it could only be an oversight that the assessee could not offer the same. In such circumstances, the explanation offered by the assessee is bona fide. Thus, when there is no furnishing of inaccurate particulars, the levy of a penalty u/s 271(1)(c) of the Act for furnishing inaccurate particulars does not arise. Therefore, the order of CIT (A) is not justified and it is set aside," the ITAT said.

Case Title: Anmole Singh Ghuman Versus ITO

Citation: ITA No.807/PUN/2019

Dated: 18.05.2022

Counsel For Appellant: None

Counsel For Respondent: S.P. Walimbe

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