DHANLABH TRADING PVT. LTD,AHMEDABAD vs. THE ACIT, CENTRAL CIRCLE 1(1), AHMEDABAD

Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has sustained the penalty levied by the assessing officer . During the course of appellate proceedings before us, ld. counsel has submitted that regular assessment has been finalized on the basis of book profit, therefore, no penalty u/s. 271(1)(c) was attracted in respect of addition/disallowance made in normal computation of income and he has placed reliance on the judicial pronouncement in the case of CIT vs. Vijay Mistry Construction and Rajkamal Builders Pvt. Ltd. Tax Appeal No. 2224 of 2009 dated 23-03-2011

We have heard the rival contention and perused the material on record carefully. It is admitted fact that assessment in the case of the assessee was finalized on the basis of book profit u/s. 115JB which was determined at Rs. 12,28,31,033/- as against assessed income 4,60,00,018/- determined u/s. 143(3) r.w.s. 147 of the act. With the assistance of ld. representatives, we have gone through the decision of Jurisdictional High court in the case of Vijay Mistry Construction and Rajkamal Builders Pvt. Ltd wherein the decision of the ITAT in deleting the penalty u/s. 271(1)(c) of the act was upheld on the ground that there was no impact on the tax liability of the assessee u/s. 115JB of the act. Further, we have also perused the decision of Co-ordinate Bench of the ITAT vide ITA No. 2330/Ahd/2015 in the case of DCIT vs. Gujarat Urja Vikas Nigam Ltd. where on identical facts the Co- ordinate Bench has deleted the penalty imposed under normal provision when the tax liability has been assessed under the special provision of section 115 of the act. The relevant part of the decision of Co-ordinate Bench of the ITAT is reproduced as under:- “6. We have carefully considered the rival submissions. The short controversy in issue is whether under S.271(l)(c) of the Act can be imposed on the alleged concealment of income by the assessee quantified with reference to the amount of tax sought to be evaded as per the normal provisions of the Act where the tax liability has ultimately arisen on the assessee at 'deemed income' as per the special provisions of Section 115JB of the Act. A reference to the decision of the Hon'ble Delhi High Court in the case of Naiwa Sons Investments Ltd. (supra) has been made on behalf of the assessee which squarely covers the issue in favour of the assessee. The subsequent amendment to the Explanation (4) of Section 271(l)(c) also suggests the purport of the existing provisions as applicable in the relevant assessment year. Therefore, we find merit with the appeal of the assessee. The AO is accordingly directed to delete the penalty imposed under normal provision when the tax liability has been fastened on the assessee under the special provisions of Section 115JB of the Act

In the result, the appeal of the assessee is allowed.