TMI Blog2016 (5) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmedabad, dated 18.07.2012 in appeal No.CIT(A)-VIII/DCIT/Cir.4/20/11-12. Penalty order for Asst. Year 2005-06 was framed under section 271(1)(c) of the I.T. Act, 1961 (in short the Act) on 30/3/2011. Following grounds have been raised by the Revenue:- 1. The ld. CIT(A) has erred in law and on facts in deleting penalty of ₹ 41,51,041/- u/s 271(1)(c) without appreciating facts that the assessee failed to corroborate its claim during the course of assessment proceedings as well as appellate proceedings which goes without saying that the claim made by the assessee is not bona fide. 2. On the facts and in the circumstances of the case, the ld. CIT(A) ought to have upheld the order of the AO. 3. It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that of the AO may be restored to the above extent. 2. Briefly stated facts as culled out from the records are that the assessee is a limited company engaged in the business of manufacturing and dealing with plastic processing machinery. Return of income was filed on 28.10.2005 showing total income at Rs.NIL after claiming brought forward losses and tax was paid on the book profits u/s 115JB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt further submits that for A.Y, 2004-05, the Assessing Officer, had levied penalty on identical case for alleged suppression of sales. The learned Commissioner (Appeals) has deleted the penalty levied for alleged suppression of sales for A.Y. 2004-05 by order dated 27/02/2009. In the case of CIT Vs. Nalwa Sons Investment Limited 327 ITR 543, Hon'ble Delhi High Court held that- The income of the assessee was thus assessed under Section 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead to tax evasion at all . The facts of the case as discussed in the appellant case is identical as the income computed as per the normal procedure was less than the income determined by legal fiction namely book profits under Section 115JB of the Act. In view of the above discussion and following the order of my predecessors in earlier years, and also on the fact that the appellant case is squarely covered by the decision of the Apex Court in the case of Nalwa sons, the penalty is not leviable The AO is directed to delete the penalty levied of ₹ 41,51,041/--. The ground of the appellant is allowed, 5. Aggrieved, the Revenue is now in appeal before us. 6. The ld. DR relied on the order of Assessing Officer. 7. On the other hand, the ld. AR of the assessee relied on the order of ld. CIT(A) and also referred and relied on the Circular issued by the CBDT vide No.25/2015 [F.No.279/Misc./140/2015/ITJ] dated 31.12.2015 which was issued by CBDT subsequent to the decision of Hon. Delhi High Court in the case of CIT Vs. Nalwa Sons Investment Limited (supra). 8. We have considered the rival submissions and perused the material on record. Revenue is aggrieved with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax which would have been chargeable had such total income been reduced by the amount of concealed income or income in respect of which inaccurate particulars had been filed. 3. In this context, Hon'ble Delhi High Court in its judgment dated 26-8-2010 in ITA No. 1420 of 2009 [2010] 194 taxman 387 (Delhi) in the case of Nalwa Sons Investment Ltd. (available in NJRS as 2010-LL-0826-2), held that when the tax payable on income computed under normal procedure is less than the tax payable under the deeming provisions of section 115JB of the Act, then penalty under section 271(l)(c) of the Act could not be imposed with reference to additions /disallowances made under normal provisions. The judgment has attained finality. 4. Subsequently, the provisions of Explanation 4 to sub-section (1) of section 271 of the Act have been substituted by Finance Act, 2015, which provide for the method of calculating the amount of tax sought to be evaded for situations even where the income determined under the general provisions is less than the income declared for the purpose of MAT u/s 115JB of the Act. The substituted Explanation 4 is applicable prospectively w.e.f. 1-4-2016. 5. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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