ASSTT. CIT - LTU, MUMBAI vs. RELIANCE INDUSTRIES LTD., MUMBAI

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ITA 554/MUM/2014Status: DisposedITAT Mumbai22 October 2015AY 1999-20003 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee's view was supported by a Supreme Court decision at the time of filing the return. The subsequent retrospective amendment to Section 115JA did not imply concealment or furnishing of inaccurate particulars of income.

What were the facts?

The Assessing Officer levied a penalty under Section 271(1)(c) for not adding provision for doubtful debt and advances while computing book profit under Section 115JA. The assessee's original view was supported by a Supreme Court decision.

What were the issues?

Whether penalty under Section 271(1)(c) is leviable when the assessee's action was based on a prevailing Supreme Court decision, even if later amended retrospectively.

Which sections of the Income-tax Act were involved?

Section 271(1)(c),Section 115JA,Section 143(3),Section 147

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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI N.K. BILLAIYA & SHRI AMARJIT SINGH

Hearing: 27.10.2015Pronounced: 27.10.2015

O R D E R

PER N.K. BILLAIYA, AM:

1.

This appeal by the Revenue is preferred against the order of the Ld. CIT(A)-24, Mumbai dated 23.10.2013 pertaining to Assessment year 1999-2000.

2.

The sole grievance of the Revenue is that the Ld. CIT(A) erred in deleting the penalty of Rs. 2,41,50,112/- levied u/s. 271(1)(c) of the Act.

3.

The roots for the levy of penalty lie in the assessment order dated 31.3.2005, made u/s. 143(3) r.w. Section 147 of the Act. During the course of the scrutiny assessment proceedings and while going through the computation of Book profit u/s. 115JA of the Act, the Assessing Officer noticed that the assessee has not added the provision for doubtful debt and advances though the provision for doubtful debts and advances was added back in the computation of income under the normal provisions. The said provision of doubtful debts and advances was added back in the computation of Book Profit and simultaneously penal proceedings u/s. 271(1)(c) of the Act was initiated.

4.

When the matter travelled upto the Tribunal, the Tribunal in & 1646/M/06 and ITA No. 2394/M/2007 observed that even though the decision of the Hon’ble Supreme Court in the case of CIT Vs HCL Comnet Systems and Services Ltd., 305 ITR 409(SC) is in favour of the assessee. Subsequently, Section 115JA has been amended by Finance Act No. 2 of 2009 with retrospective effect from 1.4.1998 and because of this retrospective amendment, the provision for bad and doubtful debts have to be added back in computing the Book Profit u/s. 115JA of the Act.

4.1. These observations of the Tribunal in quantum proceedings clearly show that on the date of filing of the return, the view taken by the assessee was well supported by the decision of the Hon’ble Supreme Court in the case of HCL Comnet Systems and Services Ltd (supra) and it is only because of the retrospective amendment, the provisions for doubtful debts and advances were added back for computation of Book Profit u/s. 115JA of the Act. Thus, it is clear that there is no concealment of particulars of income or filing of inaccurate particulars of income. Therefore, this is not a fit case for the levy of penalty u/s. 271(1)(c) of the Act. Accordingly, no interference is called for.

5.

In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the open court at the time of hearing on 27th October, 2015.

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