PR COMMISSIONER OF INCOME TAX I CHANDIGARH vs. M/S A B SUGAR MILLS LTD, CHANDIGARH

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-228-2016 (O&M) Date of decision:- 06.12.2016 Pr. Commissioner of Income Tax-I, Chandigarh ...Appellant Versus M/s A.B. Sugar Mills Ltd. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, CHIEF JUSTICE HON’BLE MR. JUSTICE DEEPAK SIBAL Present:- Ms. Urvashi Dhugga, Advocate, for the appellant. * * * * S.J. VAZIFDAR, C.J. (ORAL) This is an appeal against the order of the Tribunal confirming the order of the CIT (Appeals) deleting the penalty imposed on two accounts by the Assessing Officer. The matter pertains to the assessment year 2007-2008. 2. According to the appellant, the following substantial questions of law arise in this appeal:- “(i) Whether in the facts and circumstances of the case and in law the Hon’ble ITAT is right in upholding the decision of the CIT(A) deleting the penalty levied by relying upon the decision of Reliance Petro Products, when the issue was clearly covered by the decision of the Hon’ble Delhi High 510? (ii) Whether in the facts and circumstances of the case and in law the Hon’ble ITAT was right in deleting the penalty under section 271(1)(c) on issue of MAT adjustments by relying upon the Circular No. 25 of 2015 Amodh Sharma 2016.12.09 11:48 I attest to the accuracy and authenticity of this document chandigarh

ITA-228-2016 (O&M) 2 issued by Central Board of Direct Taxes ignoring the vital fact of the issue that the penalty has been imposed on adjustment made in the income computed for the purpose of MAT and the circular itself is very clear that penalty imposition will depend upon the nature of adjustment? (iii) Whether in the facts and circumstances of the case and in law the Hon’ble ITAT was right in deleting the penalty under section 271(1)(c) on issue of reduction of deferred tax from net profit for the purpose of arriving at book profit for MAT on the plea that the amendment to Section 115JB of the Act was made after the assessee had filed ITR, when it was outrightly incorrect to reduce the amount of deferred tax from net profit which was never credited to the P&L Account? (iv) Whether in the facts and circumstances of the case and in law the Hon’ble ITAT was right in deleting the penalty under section 271(1)(c) on issue of reduction of deferred tax from net profit for the purpose of arriving at book profit for MAT on the plea that the amendment to Section 115JB of the Act was made after the assessee had filed ITR, when prior to Finance Act, 2008 also, there was no provision in the Income Tax Act to reduce the deferred tax while calculating the Book Profits and the assessee has no basis to reduce the deferred tax amount from net profit for the purpose of MAT? “

ITA-228-2016 (O&M) 3 disallowance had been made on proportionate basis i.e. on the basis of an estimate. What is important is that it was found that there was no concealment of the particulars of income and that the particulars furnished were not inaccurate either. In these circumstances, we see no reason to interfere with the concurrent findings of both the appellate authorities as there was no concealment. Nor is any interference warranted with the exercise of discretion in not levying the penalty.

ITA-228-2016 (O&M) 4 suppression of any material or a deliberate mis-statement. The mere fact that an incorrect claim was made was held not to be sufficient in the facts and circumstances of the case to initiate the penalty proceedings. There is no warrant for interference with the exercise of discretion.