ASIAN PETROPRODUCTS & EXPORTS LTD.,BARODA vs. THE DY.CIT., CIRCLE-1(1), BARODA

आदेश / O R D E R

PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the assessee against the order of the Commissioner of Income Tax(Appeals)-I, Baroda, dated 21/05/2014 for the Assessment Year (AY) 2010-11, on the following Grounds:

i. The learned Commissioner of Income tax (Appeals) erred in law and on facts has confirming invocation of the provisions of section 115JB of the IT Act and has computed the Book Profit at Rs.80,67,181/- without considering the fact that the appellant is a Sick Industrial Unit is,

ITA No.2114/Ahd/2014 DCIT vs. Gujarat Gas Financial Service Ltd. Asst.Year – 2010-11 - 2 - therefore, covered by the clause (vii) of Explanation-1 to the second proviso of sub-section (2) of section 115JB of the IT Act. ii. The learned Commissioner of Income tax (Appeals) erred in law and on facts has initiated penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961 for the alleged concealment and/or furnishing of inaccurate particulars of income. The learned Commissioner of Income tax (Appeals) has erred in law iii. and on facts in charging interest under section 234A, 234B and 234C of the Income Tax Act, 1961. 2. The relevant facts as culled out from the materials on record are as under:- In this case, the assessee company is engaged in the business of Manufacturing and sale of chemicals. During the year under consideration the assessee has shown total receipts of Rs.7,38,70,536/- Gross profit of Rs.1,12,88,318/- i.e.15.28%. In the earlier year the figures were respectively Rs.11,20,289/- and Rs.1,12,525/- i.e.10%.

2.2 As per profit and loss account furnished, it is observed that there was net profit of Rs.80,67,181/-. As per provisions of section 115JB of the Income-tax Act, the assessee was required to pay taxes on the above book profit calculated @15% of the profit. Further, the assessee had not furnished a report in the prescribed form an accountant certifying that the book profit had been computed in accordance with the provisions of the section. The assessee was therefore required, as per order sheet entry dated 07/03/2013 to show cause as to why the tax should not be levied as provided u/s.115JB of Income-tax Act.

ITA No.2114/Ahd/2014 DCIT vs. Gujarat Gas Financial Service Ltd. Asst.Year – 2010-11 - 3 - 2.3 The assessee company submitted its reply on 20/03/2013 stating that company although has filed an application before the board for industrial & Financial Reconstruction (BIFR), it has already became a sick industrial unit as its net worth has completely eroded. Due to its financial sickness, company has not been able to make payment to its creditors.

2.4 The assessee's submission was duly considered by the AO but assessee has not furnished any documents in the form of registration as sick unit, registration certificate under BIFR etc. Therefore, the assessee could not prove that the assessee was declared a sick unit in the under consideration. The assessee does not fulfill the conditions prescribed as per explanation-(vii) of section 115JB(2) of IT Act. Further, the assessee has not furnished accountant's report in Form No 29B alongwith the return of Income. Therefore, the assessee has not complied to the provisions of section 115JB(4) of the Act. Considering all these facts, it was held by the learned AO that the assessee was liable to pay taxes u/s.115JB of IT Act and book profit as per account of Rs.80,67,181/-.

2.5 Since the Income Tax payable on the total income as computed under normal provisions of the IT Act is less than tax payable under section 115JB of book profit, the income determined u/s.115JB shall be total income of the assessee.

ITA No.2114/Ahd/2014 DCIT vs. Gujarat Gas Financial Service Ltd. Asst.Year – 2010-11 - 4 -

5.2 We have noticed that appellant during the course of assessment proceedings and appellant proceedings could not furnish any document in the form of registration as sick unit, registration certificate under BIFR etc. to the authorities below. Appellant also failed to prove before the authorities below that it was declared sick unit in the year under consideration. Even before us appellant has not furnished any documents in the form of registration as sick unit and it is also pertinent to mention here that appellant had made a profit of Rs.85,11,391/- for the year under consideration and appellant has not controverter this findings before the authorities below. The appellant has earned substantial profit for the year under consideration. Considering all these facts, it is held that appellant has not fulfilled the conditions prescribed as per explanation (vii) of section 115JB(2) of the IT Act, he has also not furnished accountant’s

ITA No.2114/Ahd/2014 DCIT vs. Gujarat Gas Financial Service Ltd. Asst.Year – 2010-11 - 5 - report in Form No.29B alongwith the return of income. In view of all these facts it is held that appellant has liable to pay taxes u/s.115JB of IT Act.

5.3 So far Ground No.2 with regard initiated penalty proceedings u/s.271(1)(c) is concerned, same does not require any adjudication merely in the basis of initiation and same is premature.

5.4 So far Ground No.3 with regard to interest under section 234A, 234B & 234C of the Income Tax Act, which will be computed as a result effect to this appeal order.

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ITA No.2114/Ahd/2014 DCIT vs. Gujarat Gas Financial Service Ltd. Asst.Year – 2010-11 - 6 -

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-I, Baroda. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy 1. Date of dictation 09/10/2017 (dictation-pad 5 pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …10/10/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………