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TMI Blog2014 (5) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaged in the business of ceramic tiles. For the assessment year 2005-06, the assesseecompany had filed return of income on October 29, 2005, declaring total income as 'Nil', after claiming deduction under section 80IB of the Act and depreciations available. The company's book profit under section 115JB of the Act was worked out at Rs.3,78,87,230/. 3. In the scrutiny assessment undertaken by the Assessing Officer of such return, he found that there was search carried out at the premises of the dealers of the company by the excise authorities. Statements of the representatives of the dealers were recorded. On the basis of revelations made by such dealers indicating clandestine removal of goods of the company without paying excise duty, the search was also carried out at the business premises of the company. Statements of the representatives of the company were also recorded. On the basis of such materials, the Assessing Officer came to the conclusion that during the period of assessment years 2003-04, 2004-05 and 2005-06 upto July 13, 2005 (i.e. the date of the search), the assessee had received a sum of Rs.64,95,365/in cash. For the assessment year under consideration, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under section 115JB loss under normal provisions Assessee's income computed as per the normal procedure was less than the income determined by legal fiction namely, book profit under section 115JB and thus income was assessed under section 115JB and not under the normal provisions Though there was concealment, it had repercussion only when assessment was made under the normal procedure - Assessment as per the normal procedure was not acted uponIt is the deemed income under section 115JB which has become the basis of the assessment. Thus tax was paid on the income assessed under section 115JBTherefore, the concealment did not lead to tax evasion at all penalty under section 271(1)(c) could not be imposed in respect of the false claim of depreciation." 10. Before us the Revenue could not bring any contrary decision in its support. In view of the aforesaid facts and relying on the aforesaid decision of Delhi High Court. We are of the view that no penalty leviable in the present case. Thus the penalty is deleted." 6. Before adverting to rival contentions we may also take note of certain other factual developments, which are relevant. Shri Hemani pointed out that the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the extent provided in the Explanation to section 115J. In view of the above, the addition made by the A.O. is, therefore, hereby deleted." 7. It is stated that such decision of the Commissioner was not challenged by the Revenue and has, thus, become final. 8. On the basis of such facts, the learned Senior Counsel Shri Manish Bhatt for the Department contended that the Tribunal committed error in deleting the penalty only on the ground that even after the addition of concealed income, the assessee still had to pay tax under section 115JB of the Act. He submitted that the decision of Delhi High Court in the case of Commissioner of Incometax v. Nalwa Sons Investments Ltd., reported in (2010) 327 ITR 543 (Delhi), would not apply. In any case, he also made an attempt to persuade us to take a view different from that taken in Delhi High Court case. 9. On the other hand, learned counsel Shri Himani opposed the appeals contending that the Tribunal committed no error. The situation is covered by the decision of the Delhi High Court in the case of Nalwa Sons Investments Ltd. (supra). In the present case, the Commissioner in his order dated November 14, 2008 deleted the additions for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even a minus figure. The court was of the opinion that „the tax sought to be evaded‟ will mean the tax chargeable not as if it were the total income. Once, we apply this rationale to Explanation 4 given by the Supreme Court, in the present case, it will be difficult to sustain the penalty proceedings. Reason is simple. 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 115 JB 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 115 JB of the Act. Hence, when the computation was made under Section 115 JB 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. 26. The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te case as and when such facts are presented before us. In the present case, we shall have to proceed on the basis that the order of Commissioner has become final. It is, thus, binding both on the Revenue as well as the assessee. Such order in effect was that addition for normal computation sustained, for the purpose of computation of book profit deleted. The result of this decision of the Commissioner would be that the tax that the assessee would pay before and after additions would remain exactly the same. In other words, since the Commissioner did not permit any increase in the assessee's book profit computation under section 115JB of the Act, even after unearthing the concealed income, the assessee ended up paying the same amount of minimum alternative tax under section 115JB of the Act even after the concealments were unearthed and accepted by the assessee. It is in this background, our discussion on the implication of Explanation 4 to section 271(1) of the Act must be seen. When in facts of the case, the assessee's tax liability did not change despite unearthing of concealed income, no penalty could have been levied. We may clarify that our conclusions should not be s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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