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2016 (2) TMI 1253 - AT - Income TaxPenalty u/s 271(1) (c) - addition of notional interest under section 36(1) (iii) - HELD THAT:- The impugned penalty has been levied on account of proportionate disallowance of the interest on amount advanced to the sister concern. It is also true that the disallowance was made on estimated basis. In that view of the matter, we hold that the CIT(Appeals) has correctly held that the assessee had not committed any default within the meaning of Sect ion 271(1) (c) of the Act. In the case of CIT Vs Reliance Petroproducts Pvt. Ltd. [2010 (3) TMI 80 - SUPREME COURT] has observed that, “Where no information given in the return is found to be incorrect or inaccurate, the assessee cannot be held guilty of furnishing inaccurate particulars.” . Also “Where there is no finding that any details supplied by the assessee in its return are found to be incorrect or erroneous or false, there is no question of inviting the penalty under section 271(1) (c) of the Act.” Addition of declared tax liability to the book profit under section 115JB - HELD THAT:- Assessee vehemently argued that clause (viii) was inserted in Explanation- I below Section 115JB(1) by Finance Act, 2008, but with retrospective effect from 01.04.2001 and so the assessee could not have known in the year in question that the deferred tax liability was not to be reduced for the purpose of calculation of book profit, which was credited to the Profit & Loss Account. In our opinion, there is merit in the above contention of assessee and therefore, we hold that the ld. CIT(Appeals) was fully justified in canceling the penalty on the addition of declared tax liability. Also the tax as per MAT is more than the regular tax calculated by the Assessing Officer. Hence, the assessee company was assessed on the book profits under section 115JB of the Income Tax Act, 1961. Recently, the CBDT has issued circular No. F.279/Misc./140/2015/ITJ dated 31.12.2015, wherein i t is stated that when the tax payable on income computed under normal procedure is less than the tax payable under the deeming provisions of Sect ion 115JB of the Act, then penalty u/s 271(1) (c) of the Act could not be imposed with reference to additions /disallowances made under normal provisions. - Assessee appeal allowed.
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