D.C.I.T CC - V,KOLKATA, KOLKATA vs. SALASAR STOCK BROKING LTD., KOLKATA
In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that penalty under section 271(1)(c) cannot be imposed when the ultimate tax liability is determined on the basis of MAT, even if concealment was detected under normal provisions. The decision of the Delhi High Court in CIT vs. Nalwa Sons Investments Limited was relied upon.
What were the facts?
The Assessing Officer imposed a penalty under section 271(1)(c) on Salasar Stock Broking Limited for additions made to its income. However, the assessee's final tax liability was determined on the basis of Minimum Alternate Tax (MAT) under section 115JB.
What were the issues?
Whether penalty under section 271(1)(c) is leviable when the final tax liability is computed under section 115JB, despite additions made under normal provisions.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
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- CIT v. Nalwa Sons Investments Ltd.104 citing327 ITR 543 · 2010 · HC · Read judgment
Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH, KOLKATA
Before: Shri P.M. Jagtap & Shri N.V. Vasudevan
Date of concluding the hearing : April 08, 2016 Date of pronouncing the order : April 19, 2016
O R D E R Per Shri P.M. Jagtap :- This appeal is preferred by the Revenue against the order of the ld. Commissioner of Income Tax(Appeals), Central-1, Kolkata dated 19.06.2013, whereby he cancelled the penalty of Rs.10,52,065/- imposed by the Assessing Officer under section 271(1)(c).
The assessee in the present case is a company, which is engaged in the business of share broking as a Member of NSE and CSE. The return of income for the year under consideration was filed by it on 05.10.2005 declaring total income of Rs.2,49,57,000/-. In the assessment completed under section 143(3) vide an order dated 20.12.2007, additions, inter alia, amounting to Rs.19,95,000/- and Rs.8,80,084/- were made by the ./2013 Assessment year: 2005-2006 Page 2 of 4 Assessing Officer to the total income of the assessee under section 94(7) and section 14A of the Act respectively. However, since the tax determined under section 115JB was more than the tax payable by the assesese under the normal provisions of the Act, final tax liability was worked out by the Assessing Officer on the basis of MAT under section 115JB of the Act. Penalty proceedings under section 271(1)(c) in respect of the additions made under section 94(7) and section 14A were also initiated by the Assessing Officer and in response to the show-cause notice issued during the course of the said proceedings, it was submitted by the assessee that since the final tax liability in its case was determined on the basis of MAT under section 115JB, the additions made under section 94(7) and section 14A did not result into any additional tax liability and there was no case for imposition of penalty under section 271(1)(c). In support of this contention, reliance was placed by the assessee on the decision of the Hon’ble Delhi High Court in the case of CIT –vs.- Nalwa Sons Investments Limited reported in 327 ITR 543, wherein it was held that although concealment was detected in the computation of tax as per the normal provisions of the Act, concealment penalty could not be imposed since ultimate tax liability was determined on the basis of MAT under section 115JB. The Assessing Officer did not find merit in the contention of the assessee. According to him, a fresh assessment under section 153A read with section 143(3) was made in the case of the assessee as a result of search for the year under consideration and since the original assessment made under section 143(3) had merged with the said assessment and the income of the assessee was finally assessed as per the normal provisions of the Act and not on the basis of book profit under section 115JB, the ratio of the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited (supra) was not applicable. He, therefore, proceeded to impose penalty of Rs.10,52,065/- under section 271(1)(c) in respect of the additions made under section 94(7) and section 14A to the total income of the assessee. ./2013 Assessment year: 2005-2006 Page 3 of 4
The penalty imposed under section 271(1)(c) was challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was pointed out by the assessee that the additions made to its total income by the Assessing Officer in the assessment completed under section 143(3) read with section 153A were already deleted by the ld. CIT(Appeals) and since its income was eventually determined on the basis of book profit under section 115JB, the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited (supra) was squarely applicable. This contention of the assessee was found acceptable by the ld. CIT(Appeals) and he cancelled the penalty imposed by the Assessing Officer under section 271(1)(c) by relying on the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited (supra). Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.
We have heard the arguments of both the sides and also perused the relevant material available on record. As submitted on behalf of the assessee before the ld. CIT(Appeals) and reiterated before us, the income of the assessee for the year under consideration has finally been assessed on the basis of book profit under section 115JB and the ld. D.R. has not disputed this position. In the case of Nalwa Sons Investments Limited (supra) relied upon by the assessee, Hon’ble Delhi High Court has held that even though concealment is detected in the computation of income as per the normal provisions of the Act, concealment penalty cannot be imposed when the ultimate tax liability of the assessee is determined on the basis of book profit under section 115JB. The ratio of this decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited thus is squarely applicable to the facts involved in the case of the assessee and we find no infirmity in the impugned order of the ld. CIT(Appeals) cancelling the penalty imposed by the Assessing Officer under section 271(1)(c) by relying on the said decision of the Hon’ble ./2013 Assessment year: 2005-2006 Page 4 of 4 Delhi High Court. At the time of hearing before us, the ld. D.R. has not been able to bring to our notice any decision of the Hon’ble jurisdictional High Court or Hon’ble Supreme Court taking a different view than one taken by the Hon’ble Delhi High Court in the case of Nalwa Sons Investment Limited (supra). We, therefore, uphold the impugned order of the ld. CIT(Appeals) cancelling the penalty imposed by the Assessing Officer under section 271(1)(c) and dismiss this appeal of the Revenue.
In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on April 19, 2016.
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