ARKA HOTELS PRIVATE LIMITED,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), HYDERABAD
What did the Tribunal hold?
The Tribunal held that since the income was assessed under Section 115JB and no income had escaped assessment, the penalty under Section 271(1)(c) was not attracted. Reliance was placed on a CBDT circular and a coordinate bench decision.
What were the facts?
The assessee company, engaged in running hotels, filed its return declaring a loss. However, taxes were paid under MAT (Minimum Alternate Tax) as the book profits were higher. The AO made additions to the returned income but tax was ultimately paid on book profits.
What were the issues?
Whether penalty under Section 271(1)(c) is leviable when income is assessed under Section 115JB and no income has escaped assessment.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Smt. P. Madhavi Devi & Shri Inturi Rama Rao
Per Smt. P. Madhavi Devi, J.M.
This is assessee’s appeal for the A.Y 2013-14 against the order of the CIT (A)-1, Hyderabad, dated 3.10.2017 deleting the penalty levied by the AO u/s 271(1)(c) of the Act.
Brief facts of the case are that the assessee company engaged in the business of running hotels, filed its return of income for the A.Y 2013-14 on 29.3.2014 declaring loss of Rs.66,17,064 and paid taxes under MAT at Rs.9,15,993. During the assessment proceedings, the AO made certain additions to the assessed income but since the income under 115JB was higher, the tax was paid on the book profits u/s 115JB of the Act. Since the additions were made to the returned income of the assessee
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ITA No 2231 of 2017 Arka Hotels P Ltd Hyderabad.
under the normal provisions of the I.T. Act, the AO initiated penalty proceedings u/s 271(1)(c) of the Act and levied the minimum penalty of Rs.24.00 lakhs. Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the order of the AO and the assessee is in second appeal before us.
The learned Counsel for the assessee submitted that though certain additions were made to the returned income, the income computed as per the normal provisions of the Act was less than the income computed u/s 115JB of the Act and therefore, the income offered by the assessee u/s 115JB alone was brought to tax and hence, there was no escapement of income and the penalty u/s 271(1)(c) is not attracted. He also drew our attention to the CBDT Circular No.25/2015, dated 31.12.2015 wherein all the Income Tax Officers were directed not to levy penalty where the income was assessed u/s 115JB of the Act. The assessee has also placed reliance upon the decision of the Coordinate Bench of this Tribunal in ITA No.1654/Hyd/2014 dated 16.02.2018 for the A.Y 2010-11 wherein the Tribunal has taken note of the CBDT Circular and under similar circumstances has deleted the penalty. In the case before us also there are no additions made to the income computed by the assessee u/s 115JB of the Act and the same has been brought to tax and therefore, the penalty is not leviable. Assessee’s appeal is accordingly allowed. 4. In the result, assessee’s appeal is allowed. Order pronounced in the Open Court on 31st August, 2018. Sd/- Sd/- (Inturi Rama Rao) (P. Madhavi Devi) Accountant Member Judicial Member Hyderabad, dated 31st August, 2018. Vinodan/sps Copy to:
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ITA No 2231 of 2017 Arka Hotels P Ltd Hyderabad.
1 Arka Hotels Pvt. Ltd, 6-3-248/1/1/A, 4th Floor, Bhaskar Plaza, Road No.1, Banjara Hills, Hyderabad 500034 2 Asstt. CIT, Central Circle 1(1) Hyderabad 3 CIT (A)-1, Hyderabad 4 Pr. CIT – 1 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File
By Order
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