TELEDIAGNOSYS SERVICES PVT. LTD.,PUNE vs. INCOME-TAX OFFICER,
What did the Tribunal hold?
The Tribunal held that penalty under Section 271(1)(c) was wrongly levied as the assessee had disclosed all relevant particulars and there was no intention to conceal income. The assessee acted on a bona fide presumption regarding the applicability of Section 115JB.
What were the facts?
The assessee declared Nil income after claiming a deduction under Section 10B. The AO computed income under Section 115JB, and subsequently imposed penalty for not offering income under Section 115JB.
What were the issues?
Whether penalty under Section 271(1)(c) is leviable when income is computed under Section 115JB due to a bona fide belief regarding the applicability of Section 10B, despite full disclosure by the assessee.
Which sections of the Income-tax Act were involved?
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- CIT v. Reliance Petroproducts Pvt. Ltd.2,228 citing322 ITR 158 · 2010 · SC · Read judgment
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER R.S.SYAL, VP : These three appeals by the assessee are directed against the orders passed by the ld. CIT(A) confirming the imposition of penalty u/s. 271(1)(c) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’) in relation to the assessment years 2009-10 to 2011-12. Since common issue is raised in all these appeals, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
ITA No.1079/PUN/2016 - A.Y. 2009-10
Brief facts of the case are that the assessee filed return declaring total income at Nil. On examination of the computation of income, it was found by the AO that the assessee declared total income at Nil after claiming deduction u/s.10B for the equal amount. The AO applied the
provisions of section 115JB of the Act and held the assessee to be
chargeable to tax on the total income computed on the touchstone of
such provision. That is how, the total income of Rs.19,83,846/- was
computed. Thereafter, penalty was imposed on the ground that the
assessee did not declare income u/s.115JB of the Act. The Ld. CIT(A)
echoed the view canvassed by the AO in levying the penalty under this
provision. The assessee is aggrieved by the confirmation of such
penalty.
Having heard both the sides and perused the relevant material on
record, it is noticed that the assessee computed Nil income under
regular provisions of the Act by showing the income before the
deduction u/s.10B at Rs.20,28,471/- and thereafter claiming deduction
under this provision for the equal amount. The AO has not disputed
the correctness of the total income before or the otherwise eligibility of
the assessee to deduction u/s.10B on such amount. The only basis for
imposition of penalty is the computation of income u/s.115JB of the Act
de hors the computation of income under the regular provisions of the
Act. In our considered opinion, this cannot be a case for imposition of
penalty.
It is seen that the assessee did not offer income u/s.115JB of the
Act in the backdrop of the fact that its 100% income was eligible for
deduction u/s 10B and on such basis the applicability of the provisions
of section 115JB did not result into computation of any positive `book
profit’ as per the provisions of clauses (f) and (ii) of Explanation 1 to
section 115JB as existing before amendment by the Finance Act, 2007 w.e.f. 01-04-2008. In such pre-amendment era, the amount of
expenses and revenue relatable to the income covered u/s. 10B etc.
were liable to be added or subtracted from the amount of net profits for
computing `book profit’ u/s.115JB of the Act, thereby not producing
any positive `book profit’ under this provision despite there being excess
of revenue over expenditure in the eligible unit. It was on the omission,
inter alia, of the words `section 10B’ in the above two clauses of the
Explanation 1 to section 115JB of the Act that the positive `book profit’
came to be computed despite 100% deduction u/s 10B of the Act in
case of excess of revenue over expenses in the eligible unit. The
assessee, as in the past, was under bona fide presumption that the
pre-amendment position was prevalent and even the auditor did not
point out the effect of amendment in the audit report given under the
provisions of sub-section (4) of section 115JB. This shows that the
auditor, who was supposed to compute the correct amount of `book
profit’ in accordance with Explanation 1 to section 115JB(2) was
oblivious to the amendment and did not report the correct amount of
`book-profit’. As and when the correct position was confronted by the
AO, the assessee accepted the position without challenging it before the
first appellate authority.
It is further relevant to note that the assessee declared all the
relevant particulars of its income and never intended to conceal or
furnish inaccurate particulars of its income. It was on the basis of such
facts declared by the assessee that the AO came to know about the
applicability of section 115JB of the Act and the computation of positive
`book-profit’ chargeable to tax. The Hon’ble Supreme Court in CIT Vs.
Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC) has held that when the assessee furnishes all the relevant details in the return of
income, which are not found to be inaccurate, any addition made
thereafter cannot be viewed as concealment of income and as such, no
penalty can be imposed u/s. 271(1)(c) of the Act. The Mumbai Bench of
the Tribunal in ACIT Vs. Rahat Industries Ltd. (ITA No.2543/Mum
/2011) vide its order dated 10-02-2012 has deleted the penalty imposed
by the AO u/s. 271(1)(c) of the Act when the assessee declared Nil
income after claiming deduction u/s.80IC but the AO computed positive
income u/s.115JB of the Act. Similar view has been taken by another
Bench of the Mumbai Tribunal in ACIT Vs. Trends Holdings &
Consultancy Pvt. Ltd. (ITA No.7379/Mum/2013) vide its order dated 28-
02-2017. Copies of such orders of Tribunal have been placed on record.
In view of the foregoing discussion and respectfully following the
precedents, we are of the considered opinion that the penalty was
wrongly levied and confirmed. We, therefore, overturn the impugned
order and order for deletion of penalty.
In the result, the appeal is allowed.
ITA Nos.1080 & 1081/PUN/2016 - A.Yrs. 2010-11 & 2011-12
Both the sides are in agreement that the facts and circumstances
of these appeals are mutatis mutandis similar to those of the appeal for
the A.Y. 2009-10. In fact, both the sides adopted the arguments made
by them in appeal for the A.Y. 2009-10 and no separate submission was
put forth. Following the view taken herein above, we set-aside the
impugned orders and order to delete the penalty.
5 .,
In the result, the appeals are allowed.
Order pronounced in the Open Court on 31st October, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (R.S.SYAL) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER उपा�य� सद�य उपा�य� उपा�य�/ VICE PRESIDENT उपा�य� पुणे Pune; �दनांक Dated : 31st October, 2018 सतीश
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order is forwarded to : 1. अपीलाथ� / The Appellant; 2. ��यथ� / The Respondent; 3. आयकर आयु�त(अपील) / The CIT (Appeals)-5, Pune. 4. आयकर आयु�त / The Pr. CIT-4, Pune �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, पुणे “बी बी बी” / DR ‘B’, बी 5. ITAT, Pune; 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,स // True Copy // // True Copy // Senior Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune*
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