The Supreme Court has left it open to the government to prosecute reputed chartered accountant firm PricewaterhouseCoopers Pvt Ltd for alleged errors in computing its taxable income for 2000-01.
A Bench headed by Justice S H Kapadia has given a free hand to the government to decide whether it wanted to go ahead with the criminal prosecution of the firm even after it paid the penalty and was not seeking refund.
The Bench asked Additional Solicitor General Parag Tripathi to look into the matter and seek instructions from the government on the issue.
The Calcutta High Court, on PwC’s appeal, had held that the firm had failed to furnish its true and correct particulars of accounts while filing the returns. The High Court had also upheld the penalty imposed by the authorities at 100 per cent of the tax alleged to be evaded.
The apex court’s direction came after PricewaterhouseCoopers senior counsel Harish Salve submitted the department was threatening to prosecute the firm.
PwC said that the penalty under Section 271 (1)(c) of the Income Tax Act, 1961, cannot be imposed if there was merely a bona fide human error on its employee’s part while preparing the return.
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According to PwC, the High Court failed to appreciate that the Income-Tax Appellate Tribunal erred in not deleting the penalty. The firm said that in the present case the matter was merely a human error and the Revenue had to establish a foolproof case for attracting penalty.
PwC had filed returns in November 2000 disclosing a total income of around Rs 21.34 crore.