JINDAL PADDING PRIVATE LIMITED,VILLAGE MANNPURA, TEHSIL NALAG vs. INCOME TAX OFFICER PARWANO, PARWANO
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Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI VIKRAM SINGH YADAV & SHRI PARESH M. JOSHI,
PER PARESH M. JOSHI, JM
This is an appeal filed by the assessee under Section
253 of the Income Tax Act, 1961 (Act for short). The
assessee is aggrieved by the order bearing
No. ITBA/NFAC/S/250/2023-24/1059642201(1) dated
12.01.2024 passed by ld. CIT(A) which is hereinafter
referred to as the “impugned order”, which is passed
under Section 250 of the Act. The relevant assessment
ITA 100/CHD/2024 A.Y. 2010-11 2 year is 2010-11 and the corresponding previous year
period is from 01.04.2009 to 31.03.2010. The ld. AO
order dated 04.02.2022 had imposed penalty of
Rs.12,36,000/- on the assessee under Section 271(1)(c)
of the Act.
Factual Matrix
The return of income declaring loss of Rs.6,62,737/-
and book profit under Section 115JB of Rs.11,11,014/-
was e-filed by the assessee company on 30.09.2010. The
assessment under Section 143(3) r.w.s. 147 of the Act
was completed on 23.09.2013 after adding Rs.40 lakhs
as unexplained cash credit under Section 68 of the Act.
The net taxable income of the assessee was assessed at
Rs.33,37,263/-. Accordingly, notice under Section 274
r.w.s. 271(1)(c) of the Act was issued on 23.09.2013
calling upon the assessee company to show cause and
explain as to why penalty under Section 271(1)(c) of the
Act should not be levied for furnishing inaccurate
particulars of income. After hearing the assessee, the ld.
AO levied minimum penalty of Rs.12,36,000/-. The order
ITA 100/CHD/2024 A.Y. 2010-11 3
under Section 271(1)(c) of the Act imposing penalty of
Rs.12,36,000/- bearing No. ITBA/PNL/F/271(1)(c)/2021-
22/1039387330(1) is dated 04.02.2022. The assessee
being aggrieved by the order imposing penalty prefers
first appeal before CIT(A) in terms of Section 246A and
the ld. CIT(A) by impugned order has sustained the order
of ld. AO imposing the penalty.
The assessee being aggrieved by the impugned order
has preferred an appeal before this Tribunal and has
raised following grounds of appeal before us :
“1. That the order passed under section 250 of the income tax act by the learned CIT (appeal) National Faceless Appeal Centre (NFAC) is against law and facts on file in as much as he was not justified to up hold the action of the learned officer for imposing penalty under section 271 (l)(c). 2. That the learned CIT appeal (NFAC) further gravely erred in upholding the action of the learned AO for initiation and further notice for penalty are not, as per law on the basis, that objection was not raised before AO. And Further, relying upon judgment, which is not relevant at all and ignoring many judgments cited. 3. That the learned CIT appeal (NFAC) further gravely erred in upholding the action of the learned AO in imposing penalty without considering the rectification order passed. The returned Income and assessed income remain the same as income is chargeable under section 115JB, even after the addition made and learned CIT appeal ignored the same and erred in confirming the penalty on the basis of Income original assessment order 4. That the learned CIT appeal (NFAC) further gravely erred in upholding the action of the learned AO in imposing penalty on the basis that once addition are confirmed it is case of concealment which is not as per judicial principal that penalty proceeding are independent proceedings and penalty is not automatic.
ITA 100/CHD/2024 A.Y. 2010-11 4 5. That the appellant craves leave to add delete or modify any ground of appeal and to add any new ground of appeal. Before the same is heard or disposed off .”
Record of Hearing
3.1 The hearing in the matter took place before us
on 16.10.2024 when both the parties appeared before us.
Both the parties were treated equally. The ld. AR for and
on behalf of the assessee has placed on record a brief
synopsis which is undated. A Paper Book from pages 1
to 48. Computation of income totaling three pages, a
letter dated 09.01.2024 of ITO, Parwanoo under RTI Act,
2005. The ld. AR at the outset invited our kind attention
to Notice dated 23.09.2013 which was issued to the
assessee in terms of Section 274 read with Section
271(1)(c) of the Act (Page 15 of Paper Book) and interalia
contended that in the said notice dated 23.10.2020 both
the limbs of Section 271(1)(c) i.e., ‘Concealed the
particulars of his income’ and furnished inaccurate
particulars of such income’ have been made applicable.
Reliance was placed on following judgements to
ITA 100/CHD/2024 A.Y. 2010-11 5 demonstrate that notice should explicity and expressly
mention the charge out of two limbs. Invocation of both
limbs in notice is bad in law :
1) Mohd. Farhan A Shaikh Vs DCIT Circle(1) Belgum 280 Taxman 334 (Karnataka HC) 2) CIT Bangalore Vs SSA’s Emerald Meadows 3) CIT Vs Manjunath Cotton & Ginning Factory 359 ITR 565 4) CIT Vs Samson Pernchery (2017) 98 CCH 39 (Bom) 5) PCIT Vs Neew Era sova Mine (2019) SCC Online Bom. 1032 6) PCIT Vs Ground of appeal Resorts & Recreation Pvt. Ltd. (2019) 106 CCH 0183 (Bombay) It was contended that ld. CIT(A) rejected the appeal of
the assessee on the ground that this objection was not
raised in the proceedings before AO which fact is
incorrect as at page 21 of the Paper Book which is reply
dated 08.11.2021 of the assessee to penalty notice, this
objection was taken up.
3.2 It was next contended by the ld. AR that when
there is no variation in the assessed income and the
returned income no penalty can be imposed. The ld.
CIT(A) in the impugned order has failed to consider the
ITA 100/CHD/2024 A.Y. 2010-11 6 rectification order passed in terms of Section 154 of the
Act. That the taxable income is Rs.11,11,014/- under
Section 115JB as per return of income as well as
assessed income. Reliance was placed on judgement of
Hon'ble Punjab & Haryana High Court in case of CIT Vs
Vardhman Acrylic Ltd., Ludhiana ITA No. 346 of 2013
(O&M) dated 04.08.2014.
3.3 The ld. AR lastly contended that addition has been
made under Section 68 without any inquiry. It is made
on basis of Investigation Report. When all the relevant
documents were filed, no penalty is imposable just on
basis of addition in assessment. Addition has been made
on basis of DDI Investigation Report and that there is
nothing on record that it was assessee's money, hence
penalty be deleted. Reliance was placed on order of this
Tribunal in case of Dy. CIT-V Vs M/s Sangrur Industrial
Corporation decision in ITA No. 429/CHD/2016 dated
18.06.2018 reported in 2018ITL 2648.
3.4 Per contra, the ld. DR has placed reliance on both
the orders of ld. AO and CIT(A) and has adopted same
ITA 100/CHD/2024 A.Y. 2010-11 7 reasoning before us as contained in said order. He
finally submitted that impugned order is not liable to be
set aside.
Findings & Conclusions
4.1 We are of the considered view that contention of
ld. AR as recorded at Para 3.2 that when there is no
variation in the assessed income and the returned
income, no penalty can be imposed. We have minutely
perused the judgement of Hon'ble jurisdictional High
Court of Punjab & Haryana in case of CIT Vs Vardhman
Acrylic Ltd., Ludhiana in ITA No. 346 of 2013 (O&M)
dated 04.08.2014 on which reliance is placed wherein
following is held :
The issue relating to levy of penalty under Section 271(l)(c) of the Act where tax was paid on the basis of book profits determined under Section 115JB of the Act was considered by the Delhi High Court in CIT vs. Nalwa Sons Investments Limited, (2010) 327 ITR 543. It was held that where the book profits were determined under section 115JB of the Act any amount of expenses claimed would not render the assessee liable to penalty under section 271(1) (c) of the Act on account of false claim of expenses. The relevant observations of the Delhi High Court read thus:- "The question, however, in the present case, would be, as to whether furnishing of such wrong particulars had any 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
ITA 100/CHD/2024 A.Y. 2010-11 8 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."
It was also recorded:- "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."
We are fully in agreement with the view expressed in the aforesaid pronouncement. The Tribunal placing reliance on judgment of Delhi High Court in Nulwa 6. Sons Investments Limited's case (supra) noticed as under:- "7. We have heard the rival submissions carefully and find that Hon'ble Delhi High Court has clearly held that once the income is assessed under MAT provisions then there cannot be any concealment and penalty cannot be levied under section 271(1) (c) of the Act. The observation of the Hon'ble Delhi High Court is as under:- 'Under the scheme of the Income Tax Act, 1961, the total income of the assessee is first computed under the normal provisions of the Act and tax payable on such total income is computed 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 the book profits are deemed as the total income of the assessee in terms of section 115JB of the Act. Where the income computed in accordance with the normal procedure is less than the income determined by legal fiction namely, the book profits under section 115JB of the Act and the income of the assessee is assessed under section 115JB and not under the normal provisions, the tax is paid on the income assessed under section 115JB of the Act. Concealment of income would have no role to play and would not lead to tax evasion. Therefore, penalty cannot be imposed on the basis of disallowance or additions made under the regular provisions.' We further find that the decision of Hon'ble Delhi High Court in CIT vs. Zoom Communication P.Limited (supra) is totally distinguishable because the penalty was
ITA 100/CHD/2024 A.Y. 2010-11 9 deleted by the Tribunal by holding that there was no concealment. However Hon'ble High Court reversed that decision. This decision is distinguishable because in case of CIT v Nalwa Sons Investment Limited (supra) penalty has been deleted by holding that no concealment can be inferred where income has been assessed under section 115JB of the Act. Accordingly, following the decision of Hon'ble Delhi High Court in CIT v Nalwa Sons Investments Ltd. (supra), we hold that the learned CIT(A) has correctly deleted the penalty." ORDER
In the premises, we set aside the impugned order
and allow the appeal of the assessee.
In result, appeal of assessee is allowed.
Order pronounced on 23.12.2024.
Sd/- Sd/- (VIKRAM SINGH YADAV) ( PARESH M. JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�/ CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
