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2016 (1) TMI 721 - ITAT AHMEDABAD

2016 (1) TMI 721 - ITAT AHMEDABAD - TMI - Penalty under section 271(1)(c) - adjustments to book profit by AO u/s 115JB - Held that:- The legal position is fairly well settled that when assessment was made on income computed under section 115JB and tax has been paid on income so computed, penalty under section 271(1)(c) cannot be imposed with reference to the additions that would have been made taking into account concealment made by the assessee while making assessment under normal procedure. SE .....

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)(c) of the Income Tax Act, 1961, for the assessment year 2005-06. 2. Grievance raised in this appeal is as follows: On the facts and in the circumstances of the case and in law, (i) the learned CIT(A) erred in law in deleting the penalty of ₹ 25,54,890 rightly levied under section 271(1)(c) of the Income Tax Act, in view of the provisions laid down therein; and (ii) the learned CIT(A) erred in not appreciating the fact that the penalty levied is on addition resulting from deliberate miscl .....

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t, in view of the provisions of Section 32(2)(iii) as amended w.e.f. 1st April 1997, the unabsorbed depreciation for earlier years cannot be allowed to be set off against "income from other sources". The stand so taken, to this extent, reached finality. It was in this backdrop that the penalty under section 271(1)(c) was imposed by observing that the Assessing Officer is "satisfied that the assessee has concealed its income to the tune of ₹ 69.82 lakhs and tried to evade its .....

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ts. Relying upon Hon'ble Delhi High Court's judgment in the case of CIT Vs Nalwa Investments Ltd (327 ITR 543), and noting that the assessment is completed under section 115JB and the income assessed under regular provisions is less than book profits, learned CIT(A) deleted the penalty. In addition to this reason, learned CIT(A) also noted that it is only a change of head of income, and that, as held by a coordinate bench of this Tribunal, in the case of DCT vs JMD Advisors Pvt Ltd (124 .....

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t when assessment was made on income computed under section 115JB and tax has been paid on income so computed, penalty under section 271(1)(c) cannot be imposed with reference to the additions that would have been made taking into account concealment made by the assessee while making assessment under normal procedure. That is what was held by Hon'ble Delhi High Court in the case of Nalwa Sons Investment Ltd (supra). The Special Leave Petition filed against this judgment has since been dismis .....

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led the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay penalty, which shall not be less than but shall not exceed three times of the amount of tax sought to be avoided by the reasons of the concealment of the particulars of his income or furnishing of inaccurate particulars of such income. Clause (c) of Explanation 4 to section 271(1) of the Act provides that for the purpose of clause 3 of the said sub-section, the expressio .....

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see's act of supplying inaccurate particulars comes to light, the tax liability before or after such concealment or providing of inaccurate particulars remains the same; by virtue of clause (c) of Explanation 4 to section 271(1) of the Act, there would be no penalty imposable. This is so because the penalty is to be computed in terms of the amount of tax sought to be avoided, such expression amount of tax sought to be avoided' is explained in Explanation 4. We have noticed that clause (c .....

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n the income tax return filed by the assessee losses are shown, penalty can still be imposed in a case where on setting off the concealed income against any loss incurred by the assessee under other 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 .....

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