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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI R. C. SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 13.09.2013 passed by the Commissioner of Income Tax (Appeals)-22 Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the AY. 2009- 10 in which the penalty levied by the AO has been ordered to be sustain.
The assessee has raised the following grounds: - “l. On the facts and in the circumstances of the case, the Ld. C1T(A) has erred in law and in facts in dismissing the assessor's appeal against the order u/s 271 (1) (c) passed by Assessing Officer (AO) and in upholding the penalty
ITA. No.6718/M/13 A.Y.2009-10 of'1,37,58,0327- levied by the AO u/s 271 (1) (c) of the I.T. Act, 1961. 2. On the facts and in the circumstances of the case, the Ld, C1T(A) has erred in law and in facts in dismissing the assesses ground of appeal for exclusion of disallowance of 10,11,684/- u/s 14A and loss on sale of motor car amounting to ' 1,10,356/- from "Book-Profit" for the purpose of computation as well as levy of penalty u/s 271(1) (c) of the I.T. Act.
3. The appellant craves leave to add, amend, alter and/or delete any of the above grounds of appeal.”
3. The brief facts of the case are that the assessment of the assessee was completed u/s 143(3) of the Act assessing the total income to the tune of Rs.23,65,44,960/- under normal provisions and Book Profit of Rs.72,00,08,440/- u/s 115JB of the I.T. Act. Since the tax on book profit was more than the normal computation of tax, therefore, the tax was charged u/s 115JB of the Act. The AO after examination of the claim of the assessee u/s 10A of the Act reduced the claim of deduction from Rs.49,84,24,703/- to Rs.14,43,35,164/- and included the same while computing the Book Profit u/s 115JB of the Act. The AO also disallowed the claim of expenses to the extent of 10,11,684/- u/s 14A of the Act and also disallowed the loss on sale of Motor Car of Rs.1,10,356/-. Thereafter, the penalty proceeding was initiated on account of concealment of income under the normal provision of the Act as well as u/s 115JB of the Act. Penalty notice dated 30.05.2012 was issued and after the reply of the assessee, the penalty to the tune of Rs.1,37,58,032/- was levied. Thereafter, the assessee filed an appeal before the CIT(A) who find justifiable to levy the penalty in view of provision u/s 115JB of the Act to the tune of Rs.1,37,58,032/-. However, the CIT(A) nowhere found justifiable to levy
ITA. No.6718/M/13 A.Y.2009-10 the penalty under the normal provision of the Act. Feeling aggrieved, the assessee has filed the present appeal before us.
We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. The CIT(A) has deleted the penalty levied under the normal provision of the Act by giving following finding mentioned below.: -
“2 6 I have carefully considered the above submission and the impugned penalty order. The appellant, during the year had claimed a sum of Rs.49,84,24,703/- as exempt u/s.10A in Form No,56F The auditor had considered the entire sale proceeds Rs.100.70 crores white computing the exemption u/s10A as against the actual receipts Rs.60,64 crores The AO during (he course of assessment proceeding had reduced Rs20.06 cores export proceeds not received within 6 months as per provisions of sec.10A(3), apart from making certain adjustments by way of apportioning the expenses as done in the earlier years and thereby restricted the claim of 10A deduction to Rs.t4,43,35,164'-. During the course of assessment proceeding itself, the appellant had realized this and filed a revised working of 10A with a reduced claim at Rs.14,43,35,164/-. In spite of the above adjustment and revision made to the claim of deduction u/s 10A ultimately the AO had charged lax u/s,115JB on book profit as it was more than the profits under normal computation. The concealment of income had its repercussions only when the assessment was done under the normal procedure If the assessment as per the normal procedure was not acted upon and it was the deemed income assessed u/s 11GJB which became the basis of assessment, then it is not the case for initiation and levy of concealment penalty u/s 271(1)(C). For this proposition I rely on the decision of the Apex court in the case of M/S NALWA SONS INVESTMENT LTD reported in 327 ITR 543. The relevant portion of the finding in para 2T to 24 are as under; '21 The question, however in the present case, would be, as to whether famishing of such particular the effect on the amount of fax sought to the evaded. Under the scheme of the and the total income at the assesses is first computed the normal provisions of the Act and tax on such total income is compared with the prescribed percentage of the book exempted under section 115JB of the Act. The higher of the two amounts is regarded as total income and tax is payable with reference to such total income. If the tax
ITA. No.6718/M/13 A.Y.2009-10 payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, book profit are deemed as the total income of the appellant in terms of section 115JB of the Act.22. In the present case, the income computed as per the normal procedure was less than the income determined by legal fiction namely book profit u/s 115JB of the Act. On the basis of normal provision, the income was assessed in the negative i.e. at a loss of Rs.369521018. On the other hand, assessment u/s 115JB of the Act resulted in calculation of profits at Rs.40163180.
In view of thereof,in conclusion, the assessment order records as follows:- Assessed at Rs.40163180 u/s 115JB of being higher of two interest u/s 234B and 234C has been charged as per the provisions of income tax Act 1961. Penalty see and examine the applicable of explanation 4.
Judgment in the case of Gold Coins (supra), obviously, the not deal with such e situation. What is held by the Supreme Court in the case that even if in the income return filed by the appellant losses are shown, penalty can still have imposed in a case where on setting off She against any loss incurred by the assesses under of income or brought forward from earlier year of income is figure its concealed income or even a minus figure. The court was of the tax sought to be evade of will mean chargeable not as if it the total income we apply this rationale to Explanation 4 given by the Supreme Court, in the present case, it wit) be difficult to sustain \ha penalty Reason is simple. No doubt, there was concealment but only when the assflssrnsnj1 was done under the normal procedure. The assessment as per the normal procedure was, however, no upon. On the contrary, If is the deemed Income assessed under Section 115JB of the Act which the basis of assessment as was higher That is thus paid was assessed under Section 115 JB of (Act-Hence, when computation was made under Section 115 aforesaid concealment had no role to play and was totally relevant . Therefore, the concealment did not lead to tax evasion at all.”
ITA. No.6718/M/13 A.Y.2009-10
However, C|IT(A) confirmed to levy the penalty u/s 271(C) on account of concealment of income in view of provision u/s 115JB of the Act. The assessee nowhere appeared to put his claim before us. On appraisal of the above mentioned finding, we found no illegality and infirmity in the order passed by the CIT(A) in question. No distinguishable material has been placed on record to deviate the finding of the CIT(A). Finding no material to interfere with the order passed by the CIT(A), we confirmed the order of the CIT(A).