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Income Tax Appellate Tribunal, DELHI ‘C’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS. SUCHITRA KAMBLE
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the Commissioner of Income Tax [Appeals]-35, New Delhi dated 28.06.2017 pertaining to Assessment Year 2013-14.
2. The solitary grievance of the assessee is that the ld. CIT(A) erred in confirming the imposition of penalty of Rs. 4,60,000/- imposed by the Assessing Officer u/s 271(1)(c) of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short].
3. Representatives of both the sides were heard at length. Case records carefully perused.
4. The roots for levy of penalty lie in the assessment order dated 15.03.2016 framed u/s 143(3) of the Act. Returned income of the assessee Rs. 35,65,090/- was assessed at Rs. 50,27,040/-. Assessment was completed by making disallowance of depreciation claimed on rented property amounting to Rs. 14,61,948/-.
5. A perusal of the computation of taxable income as per provisions of section 115JB of the Act show that tax payable comes to Rs. 16,18,097/- under the provisions of MAT whereas tax computed on the assessed income comes to Rs. 15,53,355/-, which means that the appellant has paid taxes as per the provisions of section 115JB of the Act. As per the CBDT Circular No. 25/2015 dated 31.12.2015, no penalty can be levied on an income which has been computed u/s 115JB of the Act and penalty has been levied on the additions/disallowances made under normal provisions of the Act.
CBDT Circular referred to hereinabove reads as under:
“CIRCULAR NO.25/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31-12-2015
Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act, 2000 with effect from 1-4-2001.
Under clause (iii) of sub-section (1) of section 271 of the Act, penalty for concealment of income or furnishing inaccurate particulars of income is determined based on the "amount of tax sought to be evaded" which has been defined inter-alia, as the difference between the tax due on the income assessed and the tax which would have been chargeable had such total income been reduced by the amount of concealed income or income in respect of which inaccurate particulars had been filed.
In this context, Hon'ble Delhi High Court in its judgment dated 26-8-2010 in of 2009 [2010] 194 taxman 387 (Delhi) in the case of Nalwa Sons Investment Ltd. (available in NJRS as 2010-LL- 0826-2), held that when the tax payable on income computed under normal procedure is less than the tax payable under the deeming provisions of section 115JB of the Act, then
penalty under section 271(1)(c) of the Act could not be imposed with reference to additions /disallowances made under normal provisions. The judgment has attained finality.
Subsequently, the provisions of Explanation 4 to sub-section (1) of section 271 of the Act have been substituted by Finance Act, 2015, which provide for the method of calculating the amount of tax sought to be evaded for situations even where the income determined under the general provisions is less than the income declared for the purpose of MAT u/s 115JB of the Act. The substituted Explanation 4 is applicable prospectively w.e.f. 1-4- 2016.
Accordingly, in view of the Delhi High Court judgment and substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now a settled position that prior to 1-4- 2016, where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, then penalty under section 271(1)(c) of the Act, is not attracted with reference to additions /disallowances made under normal provisions. It is further clarified that in cases prior to 1-4-2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s 271(1)(c) of the Act, will depend on the nature of adjustment.
6. The above settled position is to be followed in respect of section 115JC of the Act also.
7. Accordingly, the Board hereby directs that no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned.”
In light of the aforementioned Circular, we direct the Assessing Officer to delete the penalty levied u/s 271(1)(c) of the Act.
In the result, the appeal filed by the assessee in is allowed.
The order is pronounced in the open court on 25.03.2021 in the presence of both the representatives.