The Income Tax Appellate Tribunal (ITAT), Mumbai, in a ruling dated March 16, 2026, deleted a penalty of Rs. 6,17,612/- imposed under section 271(1)(c) of the Income Tax Act. The case involved a practicing Chartered Accountant, Gopalkrishna Narla Rao, for the Assessment Year (AY) 2015-16. The tribunal concluded that “inadvertent computational errors” do not constitute a deliberate attempt to furnish inaccurate particulars of income.
Condonation of Delay Due to Office Flooding
The ITAT first addressed a 10-day delay in filing the appeal. The assessee explained that his office was flooded during heavy rains on August 15th and 16th, 2025, which damaged his computer systems and records. This, along with the professional pressure of completing client audits and tax filings, caused the delay. Finding this to be a “reasonable cause,” the tribunal condoned the delay and heard the case on its merits.
Voluntary Disclosure and Revised Computation
The assessee originally filed a return declaring an income of Rs. 21,23,140/-. During scrutiny proceedings, the assessee noticed several inadvertent errors, such as:
- Failing to offer income under the appropriate heads.
- Incorrectly claiming deductions while computing house property income.
- Taking income from other sources directly into the income and expenditure account.
The assessee voluntarily furnished a revised computation, increasing his total income to Rs. 27,11,440/-. While the Assessing Officer (AO) accepted this revised figure without further variation, they initiated penalty proceedings for furnishing inaccurate particulars.
Tribunal’s Finding: Professionals Are Not Infallible
The ITAT Bench, consisting of Vice President Saktijit Dey and Accountant Member Jagadish, rejected the revenue’s argument that a professional should be held to a standard that precludes errors. The tribunal noted:
- No Variation: The income determined by the AO was the “very same figure” offered by the assessee in his revised computation.
- Professional Fallibility: Referencing the Supreme Court’s decision in Price Waterhouse Coopers (P.) Ltd., the tribunal stated, “merely because the assessee is a practicing Chartered Accountant, it cannot be said that he cannot commit any mistake”.
- Bona Fide Intent: The tribunal held that the assessee’s bona fides were proven by his proactive disclosure during the assessment.
Consequently, the ITAT ruled that the assessee could not be accused of “knowingly and deliberately” furnishing inaccurate particulars and deleted the penalty.