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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM
O R D E R Per Shamim Yahya, A. M.: This appeal by the Revenue is directed against the order by the Commissioner of Income Tax (Appeals) dated 04.01.2016 and pertains to the assessment year 2004- 05.
The grounds of appeal read as under: 1. " Whether on facts and in circumstances of the case and in Law, the Ld. CIT(A) was justified in holding that penalty u/s. 271(l)(c) is not attracted with reference to addition/disallowance made under normal provisions ". 2. "Whether on facts and in circumstances of the case and in Law, the Ld. CIT(A) was justified that the Assessing Officer has erred in levying penalty u/s. (A.Y. 2004-05) M/s. Penford Israel Ltd. (India Branch) 271(l)(c) of the Act on addition made of a sum of Rs.37,20,610/- being depreciation claimed u/s. 32(1) of the Act". 3. The Appellant prays that the order of the Ld. CIT(A) on the above ground(s) be set aside and that of the Assessing Officer be restored.
Brief facts of the case are that the Assessing Officer during the course of assessment found that the assessee’s claim of depreciation was not acceptable as the asset was not put to use during the year. On this penalty u/s. 271(1)(c) of the Act was also levied.
Upon the assessee’s appeal, the ld. Commissioner of Income Tax (Appeals) accepted the assessee’s contention that the claim of depreciation cannot be said to be fraudulent claim or concealed matter. He held that the facts were available and disallowance has been made by the Assessing Officer only after interpretation of the statute. Hence, he agreed with the assessee that its case is covered by the decision of Hon’ble Apex Court decision in the case of Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158 (SC).
The ld. Commissioner of Income Tax (Appeals) also deleted the penalty on account of the ratio emanating from the Hon'ble Delhi High Court decision in the case of CIT vs. Nalwa Sons Investment Ltd. 327 ITR 543 (Del) and CBDT Circular No. 25/2015 dated 31.12.2015 issued in this regard. The ld. Commissioner of Income Tax (Appeals) held as under:
Further the issue is also covered by the Circular of CBDT which has been clarified in view of the Delhi High Court judgment in the case of CIT vs. Nalwa Sons Investments Ltd. (327 ITR 543 (Del)) referred supra and (A.Y. 2004-05) M/s. Penford Israel Ltd. (India Branch) substitution of Explanation 4 of section 271 of the Act with prospective effect. The legal position is now settled that prior to 01.04.2016, where the income tax payable on the total income computed with normal provisions of the act is less than the tax payable on book profits, then penalty u/s.271(1)(c) is not attracted with reference to addition/disallowance made under normal provisions. Therefore for both the reasons discussed above, I am of the considered opinion that the facts of the case do not merit levy of penalty u/s. 271(1)(c) of the I. T. Act.
Against the above order the Revenue is in appeal before us.
We have heard both the counsel and perused the records. The ld. Departmental Representative fairly agreed that the issue is covered in favour of the assessee in view of the decision of Hon'ble Delhi High Court in Nalwa Sons Investment Ltd. (supra) and CBDT Circular No. 25/2015 dated 31.12.2015 which has directed that Explanation 4 to section 271(1)(c) is prospective in effect and hence he submitted that the penalty has rightly been deleted.
7. Upon hearing both the counsels and perusing the records, we are of the opinion that the order of the ld. Commissioner of Income Tax (Appeals) is correct on both the counts. The ld. Commissioner of Income Tax (Appeals) is correct in holding that there is no case of assessee making any fraudulent claim or furnishing inaccurate particulars of income. Hence, the ld. Commissioner of Income Tax (Appeals) is correct in deleting the penalty on the anvil of Hon’ble Apex Court decision of Reliance Petroproducts (P.) Ltd. (supra). Furthermore, since the assessment has been done under MAT provision, the ratio from Hon'ble Delhi High Court in the case of Nalwa Sons Investment Ltd. (supra) has also been rightly applied by the ld. Commissioner of (A.Y. 2004-05) M/s. Penford Israel Ltd. (India Branch) Income Tax (Appeals) in deleting the penalty. The CBDT Circular (supra) duly supports the proposition that Explanation 4 to section 271(1)(c) meant to overcome this decision is prospective and is not applicable to the assessment year under consideration. Accordingly, in the background of the aforesaid discussion and precedent, we do not find any infirmity in the order of the ld. Commissioner of Income Tax (Appeals) and accordingly we uphold the same.
In the result, this appeal by the Revenue stands dismissed. प�रणामतः राज�व क� अपील खा�रज क� जाती है । Order pronounced in the open court on 01.03.2018 Sd/- Sd/- (Amarjit Singh) (Shamim Yahya) �या�यक सद�य / Judicial Member लेखा सद�य / Accountant Member मुंबई Mumbai; �दनांक Dated : 01.03.2018 व.�न.स./Roshani, Sr. PS आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. आयकर आयु�त(अपील) / The CIT(A) 3. आयकर आयु�त / CIT - concerned 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 5. गाड� फाईल / Guard File 6. आदेशानुसार/ BY ORDER,