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2016 (4) TMI 553 - ITAT DELHI

2016 (4) TMI 553 - ITAT DELHI - TMI - Penalty u/s 271(1)(c) - deemed income is assessed u/s 115JB - rebate u/s 88E - whether penalty is time barred? - Held that:- It is apparent that the Tribunal passed order on 23.12.2011 which was received by the Commissioner [Judicial] dated 23.4.2012 and the penalty order has been passed on 30.10.2012 i.e. within six months from the end of the month in which the Commissioner received copy of the order of the Tribunal which provoked the AO to initiate penalty .....

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r normal provisions and income assessed u/s 115JB of the Act and thus tax has been paid on the income assessed u/s 115JB of the Act which is higher of the two, then concealment had no role to play and becomes totally irrelevant for imposing penalty u/s 271(1)(c) of the Act as concealment did not lead to tax evasion at all. In the present case also the assessee had paid tax on the income calculated u/s 115JB of the Act which was higher than the income calculated under normal provisions of the Act .....

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AN GARG, JUDICIAL MEMBER This appeal filed by the Revenue is directed against the order of the CIT(A)-VIII, New Delhi, dated 27/08/2013 passed in first appeal No. 64/12-13 for A.Y 2007-08. 2. The grounds raised by the revenue read as under: 1. Whether on the facts and circumstances of the case, the ld. CIT(A) has erred in deleting the penalty u/s 271(1)(c) of the Act imposed by the AO of ₹ 27,58,736/-. 2.1 Whether on the facts and circumstances of the case, the ld. CIT(A) has erred in dele .....

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nds of appeal are without prejudice to each other. 3. Briefly stated, the facts giving rise to this appeal are that the assessee company filed its return of income for A.Y 2007-08 declaring total income of ₹ 3,66,77,400/- and tax payable at ₹ 3,17,981/- after claiming rebate u/s 88E of the Income-tax Act, 1961 ['the Act' for short] of ₹ 1,07,19,814/-. The deemed total income u/s 115JB of the Act and tax payable as per return were ₹ 3,55,71,182/- and ₹ 35,57, .....

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Act and thus the AO initiated penalty proceedings against the assessee. Finally, the AO imposed penalty of ₹ 27,58,736/- by observing that as per the observations made by the ld. CIT(A) in the quantum first appeal, it is apparent that the assessee had furnished inaccurate particulars of its income in respect of ₹ 82,10,528/-. Therefore, the assessee has deliberately concealed the income and furnished inaccurate particulars of income for which the assessee is liable for penalty u/s 27 .....

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hat the same has been passed beyond the prescribed limitation period as mandated by section 275(1)(a) of the Act, therefore, the same is not sustainable being time barred. 7. The ld. AR also pointed out that the assessee has not filed any cross appeal or cross objection but as per Rule 27 of the IT(AT) Rules, 1963, the assessee can raise legal objection which can be decided on the facts and evidence already on record without filing any cross appeal or cross objection and the assessee respondent .....

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section 275(1)(a) of the Act. The ld. Counsel vehemently pointed out that in view of the above facts, the legal contention of the assessee raised by way of invoking Rule 27 may kindly be allowed and the impugned penalty order being time barred may kindly be quashed as void ab initio and unsustainable as per provisions of the Act. 8. Replying to the above, the ld. CIT(DR) pointed out that without filing any cross appeal or cross objection, the assessee cannot raise any legal objection at second a .....

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ngle of limitation prescribed u/s 275(1)(a) of the Act, then it is apparent that under this provision, the penalty order should be passed within six months from the end of the month in which the order of the Tribunal has been received by the Commissioner or other competent authority. 9. Per contra, the ld. AR submitted that as per the proposition laid down by the Tribunal in the case of ITO Vs. Gurinder Kaur reported as 102 ITD 189 [Delhi-Tri], the assessee can raise legal objections which can b .....

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] 149 Taxman 456 [Guj] v) CIT Vs Cochin Refinery Ltd [1996] 220 ITR 398 [Ker] vi) ITO Vs. Smt. Gurinder Kaur 102 ITD 189 [Del-Trib] Firstly, we may point out that the ITAT Delhi in the case of ITO Vs. Smt. Gurinder Kaur after referring to the proposition laid down by various Hon'ble High Courts in said decisions held as follows: 10. Before we proceed further, it is necessary to clear this point, namely, whether the assessee can raise these points before the Tribunal for the first time as a r .....

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e present case, the assessee has raised the point of non-recording of reason in ground No. 2 before the CIT(A) though this ground is not so categorical as the Ld. Counsel for the assessee wants us to read. Even so, such ground can be inferred from the fact that the assessee has been repeatedly asking for the reasons recorded which were not supplied to her. Even before the Tribunal right from September, 2004, the assessee has been requesting for production of the department's records obviousl .....

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s reasoning, it is open to the assessee to raise the question of non-recording of reasons for reopening the assessment before the Tribunal for the first time and seek to support the ultimate decision of the CIT(A). Even the non-disclosure of the reasons can be said to be covered by ground No. 2 taken before the CIT(A) and in the absence of any definite decision by the CIT(A), the same conclusion would follow namely, that it is open to the assessee to invoke Rule 27 even in respect of this point. .....

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the Supreme Court in Hukam Chand Mills Ltd. v. CIT of the report it was held that even assuming that Rule 27 is not strictly applicable, the Tribunal has inherent powers under Section 254(1) to entertain the argument of the respondent which amounted to a new ground. It was further held by the Supreme Court as follows: It is necessary to state that Rules 12 and 27 are not exhaustive and the powers of the Appellate Tribunal. The rules are merely procedural in character and do not, in any way, cir .....

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on of the trial court, not only on the ground contained in the judgment of the trial court, but on any other ground". Later, in the case of B.R. Bamasi v. CIT , the Bombay High Court which was dealing with the case of right of the respondent to defend the order appealed against held that the respondent would be entitled to raise a new ground in defence of the order appealed against, provided it is a ground of law and does not necessitate any other evidence to be recorded, the nature of whic .....

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raise new points or contentions subject only to the condition firstly that no new facts are required to be brought on record is capable of being disposed of on the facts on record and secondly that an opportunity is given to the other side to meet that point which is allowed to be raised for the first time in the appeal. This was also a case of the respondent. To the same effect are the decisions of the Allahabad, Gauhati, Kerala and Gujarat High Courts cited on behalf of the assessee. Therefor .....

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when we proceed to decide the controversy as to whether the assessee can validly challenge the validity of impugned penalty order notwithstanding the respondent assessee has neither filed cross appeal nor cross objection. For proper adjudication of above legal controversy, we find it appropriate to take note of Rule 27 of the Rules which reads as under: The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him A vigilant re .....

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ction. Regarding first limb, in our humble opinion, the said Rule has been created by the Legislation with an object to dispense justice to the winner who lost some issues or ground in the order appealed before the Tribunal accepted the same as the ultimate conclusion was rendered in his favour who was otherwise correct and on the sound legal footings and entitled for relief or valid claims on the issues decided against him and was legally empowered to challenge that order by way of filing cross .....

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y in his favour due to above noted reasons or situations to save him from the sword of loser party which is agitating the final conclusion of the ld. CIT(A) favouring the opponentrespondent before the Tribunal. However, we may point out that Rule 27 does not create any right in favour of a respondent where he is otherwise not eligible or debarred from filing cross appeal or cross objection. Meaning thereby, if the respondent does not validly have right to file cross appeal or cross objection, th .....

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im but the dragged respondent accepted the same by consoling himself with the ultimate favourable conclusion recorded by the lower forum. Furthermore, when the said winner is dragged before the Tribunal challenging the order passed in his favour by the loser party then this Rule 27 of the Rules comes into play to rescue the winner-respondent. 13. On the basis of threadbare analysis of Rule 27 in the light of propositions/dicta laid down by the Hon'ble High Court of Bombay in various decision .....

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that the assessee cannot raise legal objection without filing any cross appeal or cross objection because Rule 27 of the Rules provides that the respondent of an appeal may support the order appealed against by the appellant on any of the grounds decided against him. In the present case, however, the ld. CIT has not expressly adjudicated the objection of the assessee, placed a Grund No. 4 before the ld. CIT(A) alleging the penalty order being time barred as per provisions of section 275(1)(a) of .....

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DR is not tenable in this regard and the assessee is allowed to raise legal objection regarding limitation alleging penalty order as time barred under provisions of section 275(1)(a) of the Act. 15. While we consider the legal objection of the assessee that the impugned penalty order is time barred, then from the facts as we have already note hereinabove, it is apparent that the Tribunal passed order on 23.12.2011 which was received by the Commissioner [Judicial] dated 23.4.2012 and the penalty .....

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ntra, it is vivid from the dates as noted above by us that the ld. CIT [J] received copy of the Tribunal order dated 23.4.2012 and from the end of April 2012 six months period was allowed to the AO for passing the impugned penalty order and the AO passed penalty order on 30.10.2012 which is well within the prescribed limit as per section 275(1)(a) of the Act. Hence, the legal objection of the assessee-respondent raised by way of invoking Rule 27 of the Rules is hereby dismissed. On Meri ts 17. W .....

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that after considering the entire facts and circumstances of the case and observations made by the ld. CIT(A) in the quantum appeal it was apparent that the assessee had furnished inaccurate particulars of its income in respect of ₹ 82,10,528/-. Therefore, the AO was quite correct in concluding that the assessee had deliberately concealed income and has furnished inaccurate particulars of its income which attracts penalty u/s 271(1)(c) of the Act. The ld. CITDR vehemently contended that t .....

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two and tax has been paid on the assessed income u/s 115JB of the Act. The ld. AR also pointed out that when the computation was made u/s115JB of the Act allegation of concealment had no role to play and is totally irrelevant. Therefore, the allegation of concealment is not sustainable and did not lead to tax evasion at all. The ld. AR pointed out that the ld. CIT(A) granted relief to the assessee on the basis of said proposition laid down by the Hon'ble Jurisdictional High Court which has b .....

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ictional High Court has upheld the order of the Tribunal which confirmed the order of the ld. CIT(A) by which the AO was directed to delete the penalty. In the present case before us, the AO assessed the income under normal provisions of the Act at ₹ 13,69,104/- on which no exemption u/s 88E of the Act. However, the AO had calculated tax payable by the assessee at ₹ 1,76,040/- under the normal provisions of the Act and calculated tax payable u/s 115JB of the Act at ₹ 47,28,060/ .....

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here can be a tax evasion. As per Section 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 clause (3) of Section 271 (1) ( c) which stipulates that the penalty shall not exceed three times " the amount of tax sought to be evaded". The expression "the amount of tax sought to be evaded" is clarified and .....

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an the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed. In a case, however, 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 to a minus figure, the .....

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tended to levy the penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or a minus figure. Therefore, even during the period between 1.4.1976 to 1.4.2003 the position was that the penalty was leviable even in a case where addition of concealed income reduces the returned loss. When the word "i .....

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where on setting off the concealed income against any loss incurred by the assessee under any 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 to a minus figure the penalty would be imposable because in such a case "the tax sought to be evaded will be tax chargeable on concealed income as if it is "total income". 21. The question, however, in the present case, would be, as to whether furnish .....

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normal provisions is higher, such amount is the total income of the assessee, otherwise, book profits‟ are deemed as the total income of the appellant in terms of Section 115JB of the Act. 22. In the present case, the income computed as per the normal procedure was less than the income determined by legal fiction namely book profits‟ under Section 115 JB of the Act. On the basis of normal provision, the income was assessed in the negative i.e. at a loss of ₹ 369521018. On the .....

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thus assessed under Secn 115 JB and not under the normal provisions. It is in this context that we have to see and examine the application of Explanation 4. 25. Judgment in the case of Gold Coins (supra), obviously, does not deal with such a situation. What is held by the Supreme Court in that case is that even if in 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 asses .....

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nt 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 rol .....

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0. In the light of the above proposition laid down by the Hon'ble High Court, when we analyse logically the facts and circumstances of the present case, then we observe that in the quantum proceedings, undisputedly the AO assessed the income under normal provisions of the Act at ₹ 13,69,104/- on which no rebate u/s 88E of the Act was available to the assessee. In this situation, the ACIT/AO had calculated tax payable by the assessee at ₹ 1,76,040/- under normal provisions of the .....

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efully. The AO has assessed the income under normal provisions of the Income tax at ₹ 13,69,104/- on which No. 88E is available. The AO i.e. Additional CIT, Range 5 had calculated tax payable by the appellant at ₹ 1,76,040/- under normal provisions of Income tax Act and tax payable of ₹ 47,28,060/- u/s 115JB of the Act. Thus, the appellant had paid tax on 115JB of the Act. Hence there is no question of concealment u/s 271(1)(c) of the Act if computation is made u/s 115JB of the .....

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