Mistake by return filing portal doesn’t call for concealment penalty on taxpayer

A very interesting ruling has recently been made in favor of one of our esteemed customer, mentioning TaxSpanner.com in the judgment (see the complete text below). We congratulate her for the favorable judgment.
However, we would like to clarify that the software works on the basis of data entered into the system by the customer. Our tax filing software undergoes several levels of testing and is among the leading e-filing portal. We are now investigating the audit trail of this particular case to reach a conclusion. In the scenario, if an isolated Form 16 was not parsed correctly, we apologize to the customer. In the scenario if the data entry had the flaw, the software had no sure-shot way of detecting the data-entry error. Irrespective of the reason behind this particular matter, we fully stand behind our customers at all times. Once again, congratulations to the assessee!
April 22, 2016 (ITAT Mumbai Bench D)
IT: Where assessee’s salary was understated in her return due to mistake of online tax return filing portal (TaxSpanner.com) and assessee could not verify contents of return due to her pregnancy and immense pressure in office, concealment penalty was not justified
FACTS: Assessee was a salaried employee who provided her Form No. 16 to an online tax return filing website (TaxSpanner.com) for filing of her return of income. An error occurred due to mistake committed by website as a result of which her income was understated. Assessee received ITR-V from website and as she was having pregnancy of five months and due to immense work pressure in the office, she could not devote time to see the content of ITR filed, signed it straightaway and sent it to Income-tax Department. The Assessing Officer levied penalty for concealment of income.
HELD: (a) The assessee had claimed refund of taxes only in instant assessment year and in the last seven years assessment year 2009-10 to 2015-16 except instant in assessment year, no attempt has been made by the assessee to claim refund of taxes. The assessee derives income mainly from salary and her salary income is subjected to deduction of tax at source and she could under normal circumstances gain by filing in-accurate particulars/concealment of income by way of claiming refund of taxes. However the conduct of the assessee is bona-fide and it is due to the error and mistake in the instant assessment year, return of income was wrongly filed. As soon as the assessee came to know about the error/mistake, she immediately took steps to deposit back the refund of taxes so received with the Government Treasury and intimated the Assessing Officer. Thus, the conduct of the assessee is bona-fide and there is no mala-fide intention on the part of the assessee although error/mistake took place in filing return of income.
(b) Further, the assessee’s salary income was subjected to deduction of tax at source by her employer and the employer also intimate the revenue about the gross salary paid and tax so deducted at source on such salary by filing quarterly return of TDS and, thus, the revenue is fully aware of the salary income of the tax-payer in its data-base. The employers issue form no 16 to employees whereby all the salary details are furnished along with details of tax deducted at source and hence it is not possible under normal circumstances for a salaried employee to evade taxes by filing in-accurate salary particulars or concealing salary income in the return of income as the mismatch in the information furnished by the tax-payer vide return of income vis-à-vis information with revenue in its database will be captured by the revenue.
(c) Thus, the conduct of the assessee was not mala-fide and contemptuous and the assessee had come forward by offering a bona-fide explanation about the error committed by the online tax return filing portal and hence the assessee was not liable for penalty under section 271(1)(c).