DCIT 14(3)(2), MUMBAI vs. SONU REALTORS P.LTD, MUMBAI

आदेश / O R D E R

Per Joginder Singh (Judicial Member) The Revenue is aggrieved by the impugned order dated 27/05/2015 of Ld. Commissioner of Income Tax, Mumbai deleting penalty under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act) amounting to Rs.1,63,71,320/- without appreciating that the assessee has tax liability under section 115JB, however, it has offered tax under normal provisions of the Act and, therefore, had furnished inaccurate particulars to evade tax relying upon the decision in CIT vs. Nalwa Sons Investment Ltd. 327 ITR 543 (Del). 2. During hearing the learned D.R. Shri Kailash Kanojyia advanced arguments, which is identical to the ground raised

. On the other hand, Shri J.P. Bairagra, learned counsel for the assessee defended the conclusion arrived at in the impugned order. 2.1 We have considered the rival submissions and perused the material available on record. Before coming to any conclusion we are reproducing hereunder the relevant portion from the conclusion drawn in the impugned order by the learned First Appellate Authority for ready reference and analysis: -

23. I have considered appellant’s submissions. In this case though tax is levied u/s. 115JB while filing the return of income appellant had failed to compute tax u/s.115JB. Later CIT revised the assessment u/s.263 and A.O. had levied tax u/s. 115J3 which appellant had paid. However, A.O. had levied penalty u/s.271(1)(c) for not paying the tax u/s. 115JB M/s. Sonu Realtors P. Ltd. on the ground that appellant had filed inaccurate particulars of income. Here the issue to be considered is whether the penalty can be levied u/s. 271(1)(c) if the income is calculated on the deemed income u/s. 115JB. This issue was considered by Delhi High Court in the case of CIT vs Nalwa Sons Investments Ltd. 327 ITR 543 wherein it is held as under: "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 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 SLP filed against the order was rejected by Hon'ble Supreme Court As reported in 194 Taxman 387. On perusal of the Hon'ble High Court and Supreme Court orders it is clear that penalty cannot be levied u/s. 271(1)(c) if the income is computed u/s. 115JB. Following the above decisions of Hon'ble High Court and Supreme Court orders, penalty levied u/s. 271(1)(c) is cancelled. These grounds of appeal are allowed.” 2.2 If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, the facts in brief are that the assessee is engaged in construction business declared income of Rs.51,34,740/-, after claiming addition of Rs.13,72,33,540/- under section 80IB(10) of the Act. Thereafter the learned CIT invoked revisional jurisdiction under section 263 of the Act holding that assessee is taxable under section 115JB of the Act. The learned Assessing Officer framed assessment under section 143(3)

M/s. Sonu Realtors P. Ltd. r.w.s. 263 and assessed the income under section 115JB and accordingly the assessee paid tax. Later on the learned Assessing Officer levied penalty under section 271(1)(c) of the Act on the basis that the assessee furnished inaccurate particulars of income. 2.3 On appeal before the learned CIT(A) the written submission of the assessee were considered in which broadly the decision in Nalwa Sons Investments Ltd. (supra) was considered. The penalty was deleted. The Revenue is aggrieved and is in appeal before this Tribunal. 2.4 In view of the above, considering the decision in CIT vs. Nalwa Sons Investments Ltd. at the SLP against the decision was rejected by Hon'ble Apex Court in 194 Taxman 387 (SC) and the facts available on record there is no dispute to the fact that the assessment as per normal procedure was not acted upon and only the deemed income assessed under section 115JB became the basis of assessment as it was higher of the two. In the case of Nalwa Sons Investment Ltd. it was held that when the tax was calculated on the deemed income under section 115JB. the Revenue is not to impose penalty. Since the tax has been paid by the assessee under section 115JB, therefore, not penalty could be levied in respect of additions/disallowances made by the Assessing Officer. Respectfully following the decision from the Hon'ble High Court we find no infirmity in the conclusion of the learned CIT(A). Resultantly the appeal filed by the Revenue is dismissed.

M/s. Sonu Realtors P. Ltd. This order was pronounced in the open court in the presence of Ld. Representative from both sides at the conclusion of the hearing on 18/07/2016. Sd/- Sd/- (Rajesh Kumar) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य / JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 20/07/2016 ÇAÑA P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT-14, Mumbai. 4. आयकर आयु�त / CIT(A)-22, Mumbai 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file.