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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI RAJPAL YADAV, & SHRI N.K. BILLAIYA
PER N.K. BILLAIYA, AM:-
This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals] - 23, New Delhi dated 29.01.2015 pertaining to assessment year 2008-09.
The sole grievance of the Revenue is that the CIT(A) erred in deleting the penalty of Rs. 5,66,15,886/- imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'the Act'].
The roots for levy of penalty lie in the assessment order dated 29.12.2011 framed u/s 153A r.w.s 143(3) of the Act.
The book profit declared by the assessee at Rs. 4,88,73,78,362/- was assessed at Rs. 5,40,74,77,272/- after making addition on account of disallowance of claim of the assessee to reduce the profit eligible for deduction u/s 80HHC of the Act, addition made on account of provision of bad and doubtful debts reduced by the assessee from the books profits, addition made on account of provision for FBT and addition made on account of expenditure incurred for earning exempt income. The net tax payable u/s 115JB of the Act was determined at Rs. 61,26,67,175/-.
On these additions made to the book profit, the Assessing Officer was satisfied that the assessee has furnished inaccurate particulars of income and has also concealed the particulars of income and rendering
itself liable for initiation of penalty u/s 271(1)(c) of the Act. Accordingly, penalty was levied u/s 271(1)(c) of the Act.
The assessee carried the matter before the CIT(A) and was successful in convincing the first appellate authority that the decision of the Hon'ble High Court of Delhi in the case of Nalwa Sons Investment Ltd 327 ITR 543 squarely apply. The first appellate authority was convinced with the contention of the assessee and deleted the penalty so levied.
Before us, the ld. DR strongly supported the findings of the Assessing Officer.
Per contra, the ld. A.R. reiterated what has been stated before the lower authorities.
We have given thoughtful consideration to the orders of the authorities below. It is true that the Assessing Officer has made certain additions while computing the book profit u/s 115JB of the Act. But the following conclusion of the Assessing Officer is worth mentioning here:
“The income tax payable on the total income computed as per Chapter-IV D and Chapter -VI A is more than 10% of the book profit as determined u/s 115JB of the Income Tax Act, 1961, assessment is framed u/s 143(3) of the Act at an income of Rs.202,42,35,789/-. Assessed accordingly. Give credit for prepaid taxes. Charge Interest u/s 234A, 234B, 234C & 234D of the Income Tax Act, 1961. Issue necessary forms. Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 are being initiated separately”
Thus, it can be seen that the assessment is ultimately framed u/s 143(3) of the Act whereas the penalty has been levied on the additions made for computing the book profit u/s 115JB of the Act. The facts of the case in hand are clearly covered in favour of the assessee and against the Revenue by the following Circular of the CBDT:
“CIRCULAR NO. 25/2015 F.No.279/Misc./140/2015/ITJ Government of India Ministry of Finance Central Board of Direct Taxes New Delhi, 31st December, 2015 Subject: Penalty u/s 2yi(i)(c) wherein additions/disallowances made under normal provisions of the Income Tax Act, 1961 but tax levied under MAT
provisions u/s H5JB/ii5JC,for cases prior to A.Y. 2016-17- reg.-
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 2. 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 3. dated 26.8.2010 in ITA No.1420 of 2009 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 27i(i)(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- 4. 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. 01.04.2016.
Accordingly, in view of the Delhi High Court judgment and 5. 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 27i(i)(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 27i(i)(c) of the Act, will depend on the nature of adjustment.
The above settled position is to be followed in respect of 6. section 115JC of the Act also.
Accordingly, the Board hereby directs that no appeals may 7. 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.
(Ramanjit Kaur Sethi) DCIT(OSD) (ITJ), CBDT, New Delhi”
In the light of the aforementioned Circular of the Board, the ground raised by the Revenue is dismissed.
In the result, the appeal of the Revenue stands dismissed.
The order is pronounced in the open court on 20.08.2018.
Sd/- Sd/- [RAJPAL YADAV] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 20th August, 2018 VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order