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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 19/3/2015 passed by CIT(A)-II, New Delhi for Assessment Year 1999-00.
The grounds for appeal are as under:- 2.
“1. That the learned Commissioner of Income Tax (Appeals)-2, New Delhi has erred both in law and on facts in sustaining the Penalty u/s 271 (1)( c) of Rs. 2,63,298/- which was imposed on disallowance of Registrar of Companies Charges and Deduction u/s 80HHC of the Income Tax Act,1961.
That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that even on the principle of consistency the disallowance made is untenable.
That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that tax has been paid as per provisions of section 115JB of the Income Tax act, in which such additions does not play any role as has been held by the judgment of Hon’ble High Court of Delhi in the case of CIT vs. M/s Nalwa Sons Investment Ltd.
4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in concluding that merely treating an expense into some different head does not qualify as concealment. Making a wrong claim is not at par with concealment or giving of inaccurate information, which may call for levy of penalty under section 271(1)( c). It is therefore, prayed that disallowance made and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant company be allowed.”
3. The assessment in this case was completed u/s 147/143(3) of the Income Tax Act, 1961 on 15/12/2006 wherein income of the assessee Company assessed at 63,66,915/- under normal provisions of Income Tax Act. The case was assessed at MAT since the tax payable as per the MAT is more than that of normal provisions. While completing the assessment, the Assessing Officer made certain additions, disallowances under the various heads and initiated penalty proceedings u/s 271(1)(c) of the Act. Against the order of the Assessing Officer the assessee filed appeal with the CIT(A). The CIT (A) while orders dated 28/7/2009 dismiss the appeal of the assessee. However, on the issue of deduction u/s 80HHC, the relevant on account of scrap sell was allowed to the assessee consequent to which the disallowance u/s 80HHC comes to Rs. 1,30,963/-. With reference to CIT (A) order dated 28/7/2009 penalty notice was issued to the assessee. The penalty order dated 24/3/2011 was passed and the Assessing Officer impose penalty of Rs.2,63,298/- u/s 271 (1)(c) of the Act for furnishing of inaccurate particulars of its income.
Aggrieved by penalty order, the assessee filed appeal before the CIT (A). The CIT (A) dismissed the appeal of the assessee.
The Ld. AR submitted that in sustaining the penalty u/s 271(1)(c) of Rs. 2,63,298/- which was imposed on disallowance on ROC charges and deduction u/s 80HHC of the Income Tax Act, 1961 are not proper and just. The Revenue authorities failed to appreciate that tax has already been paid as per provisions of Section 15JB of the Act in which such additions does not play any role as has been held by the Hon’ble Delhi High Court in case of CIT Vs. M/s Nalwa Sons Investment Ltd. (2010) 327 ITR 543. The Ld. AR further submitted that there is no concealment of income or that of furnishing of inaccurate particulars on behalf of the assessee. The Ld. AR further submitted that merely treating an expense into some different head does not amount to concealment and making a wrong claim is not at par with furnishing inaccurate information/particulars. The Ld. AR further submitted that the company is in liquidation.
The Ld. DR relied upon the order of the CIT (A) and penalty order.
We have heard both the parties and perused the material available on record. It is pertinent to note that the assessment was completed vide order dated 15/12/2006 and the additions made therein was subsequently restricted to Rs.1,30,963/- as regards disallowance u/s 80HHC by the CIT(A) vide order dated 28/7/2009.. The assessee has already paid tax as per the provisions of MAT u/s 115JB of Rs.26,84,222/-. Thus, the assessee has simply made its claim regarding deduction u/s 80HHC which does not amount to furnish of inaccurate particulars in case of Nalva Sons Investment Ltd. The Hon’ble Delhi High Court held as under:-
“The question, however, in the present case, would be, as to whether furnishing of such wrong particulars had any the effect on the amount of tax sought to be evaded. Under the scheme of the Act, the total income of the assessee is first computed under the normal provisions of the Act and tax payable on such total income is compared with the prescribed percentage of the 'book profits' computed 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 payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, 'book profits' are deemed as the total income of the appellant in terms of Section 115JB of the Act.
In the present case, the income computed as per the normal procedure was less than the income determined by legal fiction namely 'book profits' under Section 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 under Section 115JB of the Act resulted in calculation of profits at Rs. 40163180.
In view thereof, in conclusion, the assessment order records as follows:
Assessed at Rs. 40163180 Under Section 115JB, being higher of two. Interest Under Section 234B and 234C has been charged as per the provisions of Income Tax Act, 1961. Penalty proceedings Under Section 271(l)(c) of the Income Tax Act, 1961 have been initiated. Issue necessary forms. 24. The income of the assessee was thus assessed under Section 115JB and not under the normal provisions. It is in this context that we have to see and examine the application of Explanation 4.
Judgment in the case of Gold Coins (supra), obviously, does not deal with such a situation. What is held by the Supreme Court in that case is that even if in the income tax return filed by the assessee losses are shown, penalty can still be imposed in a case where on setting off the concealed income against any loss incurred by the assessee under other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even a minus figure. The court was of the opinion that 'the tax sought to be evaded' will mean the tax chargeable not as if it were the total income. Once, we apply this rationale to Explanation 4 given by the Supreme Court, in the present case, it will be difficult to sustain the penalty proceedings. Reason is simple. No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed under Section 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under Section 115JB of the Act. Hence, when the computation was made under Section 115JB of the Act, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all.
The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on different grounds. Therefore, while we do not agree with the reasoning and approach of the Tribunal, for our reasons disclosed above, we are of the opinion that penalty could not have been imposed even in respect of claim of depreciation made by the assessee. This appeal is accordingly dismissed.”
Thus, there is no concealment of income or inaccurate furnishing of documents in the present case and the ratio laid down by the Hon’ble Delhi High Court is squarely applicable to the present case. Therefore, the appeal of the assessee is allowed. 8. In result, the appeal of the assessee is allowed.