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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -17, Chennai, dated 30.03.2016 pertaining to assessment year 1998-99, to rework the quantum of penalty in terms of Section 271(1)(c)(iii) of the Income- tax Act, 1961 (in short 'the Act').
Shri Supriyo Pal, the Ld. Departmental Representative, submitted that the Assessing Officer levied penalty for the assessment year 1998-99. Subsequently, the assessee filed Miscellaneous Petition claiming that the penalty under Section 271(1)(c) of the Act was imposed with regard to income of `2,86,00,000/-. According to the Ld. D.R., the income computed as
per normal provisions of Income-tax Act was `3,59,27,960/-. The total income computed under the provisions of Section 115JA of the Act was `4,60,24,592/- According to the Ld. D.R., the assessee claimed before the Assessing Officer that the tax payable on the income computed under Section 115JA of the Act was higher than the tax payable under the normal provisions of the Income-tax Act.
Therefore, the tax payable on the income computed under Section 115JA of the Act has to be adopted. According to the Ld. D.R., Section 115JA of the Act does not say that where the tax payable under the normal provisions of the Act is less than the tax payable on the book profits under Section 115JA of the Act, the income computed under Section 115JA of the Act is to be adopted. In this case, according to the Ld. D.R., the tax payable under the normal computation is higher than the tax payable under Section 115JA of the Act.
On the contrary, Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the CBDT in its circular No.25/2015 dated 31.12.2015 clarifies that where the tax payable on the total income as computed under the normal provisions is less than the tax payable on the book profits under Section 115JB of the Act, then penalty under Section 271(1)(c) of the Act is not attracted with reference to additions/disallowances made under normal computation. In this case, according to the Ld. counsel, the income- tax payable under the normal computation is less than the tax payable on the book profit under Section 115JA of the Act, hence, the addition made to the extent of `2,86,00,000/- in the normal computation cannot attract penalty in view of the circular issued by the CBDT. Therefore, according to the Ld. counsel, the CIT(Appeals) has rightly directed the Assessing Officer to rework the quantum penalty based on the tax sought to have been evaded as per Section 271(1)(c) (iii) of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that penalty was imposed on the income of `2,86,00,000/- which was added by the Assessing Officer while computing the income under the normal provisions of the Act. It is also not in dispute that the tax payable under normal computation is `3,59,27,960/-. However, the tax payable under Section 115JA of the Act is `4,60,24,592/-. Thus, the tax payable under the provisions of Section 115JA of the Act is higher than the tax payable under normal provisions of the Act. The CBDT in its circular No.25/2015 dated 31.12.2015, more particularly at para 5, has clarified the position as follows:-
“5. Accordingly, in view of the Delhi High Court judgment and 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 under Section 115JB of the Act, then penalty under 271(1)(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 under Section 271(1)(c) of the Act, will depend on the nature of adjustment.”
In view of above, when the tax payable under the book profits under Section 115JA is higher than the tax payable under normal computation, the provisions of Section 271(1)(c) of the Act is not attracted. Therefore, this Tribunal has no reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced on 20th September, 2017 at Chennai.