TMI Blog2014 (8) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... the concealment did not lead to tax evasion at all - penalty could not have been imposed even in respect of the false claim of depreciation made by the assessee - When computation of income was made u/s 115JB, and there was loss under the normal provisions, concealment, if any, did not lead to tax evasion at all and penalty u/s 271(1)(c) could not be imposed - The principles indicated that the withdrawal of a claim in survey proceedings does not attract penalty u/s 271(1)(c) - assessee has bonafide explanation and the assessee tax computation was determined by the AO u/s 115JB, there is no scope for levy of penalty u/s 271(1)(c) – Decided in favour of Assessee. - ITA. No. 71/Hyd/2007 - - - Dated:- 13-8-2014 - Shri B. Ramakotaiah And Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit under section 115JB at ₹ 78,04,31,034. As seen from the assessment order, A.O. also made adjustments to the computation of book profits, determined the book profit at ₹ 78,04,31,034/-. He vide page 23 of the order has noted that the tax liability on total income computed under the regular provisions of the I.T. Act was less than that of book profits computed under section 115JB, the later was adopted for computing the tax payable by the assessee. Since the assessee withdrew the claim consequent to the survey proceedings, A.O. initiated proceedings under section 271(1)(c) and levied penalty on the above amount for making a false claim. 3. Before the Ld. CIT(A), assessee contended that the claim was made bonafide, as pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income, so as to attract penalty under section 271(1)(c). 5. Learned D.R. however submitted that assessee admitted that the depreciation was not allowable and withdraw the claim. Therefore, the claims becomes bogus and relied on various decisions. (i) Dayabhai Girdharbhai vs. CIT (1957) 32 ITR 677 (Bom.) (HC) (ii) Ravi Co. vs. ACIT (2004) 271 ITR 286 (Mad.) (HC) 6. We have considered the issue and examined the facts on record. As seen from the assessment order, even though there was withdrawal of depreciation claimed, it has no effect on the tax computation as the A.O. determined the tax under the provisions of section 115JB. Even though there are many additions and deletions in the computation under the normal provisions as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve any evidence. Claim for depreciation qua that machinery was rejected on this ground. It thus becomes clear that the assessee had claimed the depreciation on the said machinery projecting that it had used the machinery which, turned out to be false. Neither the CIT(A) nor Tribunal looked into the matter from the proper perspective and rather scuttled the real issue by deleting the penalty. As per s. 271(1)(c), the penalty can be imposed when any person has concealed the particulars of his income or furnished incorrect particulars of the income. Once this condition is satisfied, quantum of penalty is to be levied as per cl. (iii) of s. 271(1)(c) which stipulates that the penalty shall not exceed three times the amount of tax sought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the two. Tax is thus paid on the income assessed under s. 115JB. Hence, when the computation was made under s. 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on different grounds. Therefore, while the reasoning and approach of the Tribunal is not tenable, for the reasons disclosed above, penalty could not have been imposed even in respect of the false claim of depreciation made by the assessee. When computation of income was made under s. 115JB, and there was loss under the normal provisions, concealment, if any, did not lead to tax evasion at all and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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