Sec. 271(1)(c) of Income Tax Act, 1961— Penalty —A bonafide error or mistake does not necessarily invite penalty proceedings in every case.

Facts: This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeal) and the ground on which appeal was raised was that the learned CIT(A) erred in confirming the levy of concealment penalty u/s.271(1)(c) amounting to Rs. 2,54,865/ ( being 30.9% of Rs. 8,24,805) levied on tax allegedly sought to be evaded on the amount of interest earned on income tax refund.”

Held, that penalty proceedings under s.271(1)(c) were initiated for non- disclosure of interest received on excess amount of tax paid to the Income Tax Department in the instant case. It was pointed out on behalf of the assessee that it did not have requisite details of interest embedded in refund amount and came to know about the same only from system generated Form 26AS. It was pointed out that there was no willful submission of false return with tested on the touchstone of preponderance of probabilities. It is submitted on behalf of the assessee that it is large taxpayer alleged and concealments is disproportionately miniscule which is an indicator that it is a bonafide error. We find merit in the circumstances narrated on behalf of the assessee. A bonafide error or mistake does not necessarily invite penalty proceedings in every case. Benefit of doubt should go to the assessee, more so where we have a case in hand for determination of penalty which is penal in nature. The order of the CIT(A) is accordingly set aside and the Assessing Officer is directed to cancel this penalty on this score. - SAUBHAGYALAXMI DEVELOPERS V/s ITO - [2020] 26 ITCD Online 067 (ITAT-PUNE)