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Before: SHRI G. D. AGRAWAL & SMT SUCHITRA KAMBLE
This appeal is filed by the Revenue against the order dated 27/12/2013 passed by the CIT(A)-XVI, New Delhi.
The grounds of appeal are as follows:
“1. On the facts & in the circumstances of the case, the CIT(A) has erred in allowing the appeal of the assessee by deleting the penalty u/s 271(1)(c) of the Act amounting to Rs.71,05,805/- imposed for concealment and furnishing of inaccurate particulars on the assessee by not considering A.O in its assessment order and the penalty order.
2. On the facts & in the circumstances of the case, the CIT(A) has by ignoring the 5th clause of section 115JB of the IT Act wherein it specifically mentioned that though tax is paid as per book profit under Companies Act but all other provisions of the Act will be applicable on the assessee in the similar way as would have been otherwise applicable.
3. On the facts & in the circumstances of the case, the CIT(A) has erred by giving relief to the assessee by ignoring the fact that the assessee has knowingly and intentionally tried to conceal the actual income and has submitted inaccurate particulars to ditch the department and to evade tax.
4. On the facts & in the circumstances of the case, the CIT(A) has erred by ignoring the provisions of the CBDT in Clause No. 2 of Circular No. 13 of 2001, dated 9/11/2001 wherein the Board has stated that “……… all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment, assessment, etc., would apply in respect of the provisions of this section.”
5. On the facts & in the circumstances of the case, the CIT(A) has erred in deleting the penalty of Rs. 71,05,805/- u/s 271(1)(c) of the Act by not considering that the case of the assessee squarely falls under explanation 1 & 4 to section 271(1)(c) of the Income Tax Act, 1961 and the assessee had failed to discharge its onus of proving that there was no fraud or neglect in filing the correct income.”
The penalty order was passed on a book profit addition and not on the regular income.
The Ld. AR submitted that as per CBDT Circular No. 25/15 dated 31st December 2015, it is 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 u/s 115JB of the Act, then penalty u/s 271(1)(C) of the Act is not attracted. In this particular case, the penalty is levied on the book profits u/s 115JB of the Act. Hence, the penalty does not sustain. The Ld. AR also relied on the Hon'ble Supreme Court’s decision in case of CIT Vs. NALWA Sons Investment Ltd. 327 ITR 523 wherein the Hon’ble Delhi High Court’s finding was upheld as to when the computation was made u/s 115JB of the Act, the concealment had no role to play and is totally irrelevant. Thus, the concealment did not lead to tax evasion at all.
The Ld. DR relied on penalty order but cannot controvert Hon'ble Delhi High Court’s decision as well as the Supreme Court’s order in case of CIT Vs. NALWA Sons Investment Ltd.
We have perused all the materials and heard contentions of the parties. The CBDT Circular clearly states that 271(1)(C) penalty cannot be attracted in case of additions u/s 115JB i.e. book profit. The Hon'ble Supreme Court judgment also reiterates the same. In the present case also the penalty is imposed on the additions under Section 115JB of the Act which is not permissible. Thus the CIT(A) has rightly deleted the penalty. The addition made in the assessee’s case is totally perverse and without any authority of law.
In result, the appeal of the Revenue is dismissed.
The order is pronounced in the open court on 08th of April, 2016.