Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 636 - ITAT AHMEDABAD

2016 (5) TMI 636 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - tax on total assessed income was lesser than the tax paid by the assessee on the basis of book profit u/s 115JB - Held that:- Assessee squarely falls within the four corners of the CBDT Circular No.25/2015 [F.NO.279/MISC./140/2015/ITJ] which clearly says that where the income tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profits u/s 115JB of the Act, the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

countant Member. This appeal is directed at the instance of Revenue against the order of ld. CIT(A)-VIII, 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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 Act. Case was selected for scrutiny assessment and notice u/s 143(3) was issued on 26.7.2006. Assessment u/s 143(3) of the was completed on 16.12.2008 and after adjusting the brought forward losses taxable i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oftware expenses of Rs.5,07,600/- Subsequently after issuing show cause notice for imposing penalty u/s 271(1)(c) of the Act, ld. Assessing Officer framed the order on 30th March, 2011 u/s 271(1)(c) of the Act by imposing penalty of ₹ 41,51,041/- on the following two additions confirmed by ld. CIT(A)- i) Provisions for warranty restricted to Rs.43,32,300/- ii) Addition on account of suppressed sales Rs.70,11,674/- 4. Assessee went in appeal before ld. CIT(A) against the order u/s 271(1)(c) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The appellant submits that for A.Y. 2003-04 and for A.Y. 2004-05, the Assessing Officer had levied penalty on identical case for disallowance of provision for warranty. The learned Commissioner (Appeals) has deleted the penalty levied for disallowance for warranty for A.Y. 2003-04 as well as for A.Y. 2004-05 by order dated 06/12/2010 and dated 27/02/2009 respectively. The appellant further submits that for A.Y, 2004-05, the Assessing Officer, had levied penalty on identical case for alleged sup .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ns (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 opinio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e 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 115JB of the Act. Hence, when the computation was made under Section 115JB 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". On appeal by the department to the Supreme Court, Petition(s) for Special Leave to Appeal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

6,55,419/- on which the appellant has paid tax as the income under the book profit was much higher than the income calculated as per normal procedure. as ratified by the Apex Court in the case of Nalwa sons that "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 norm .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 l .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 deletion of penalty by ld. CIT(A) at ₹ 41,51,041/- imposed u/s 271(1)(c) of the Act for disallowance of warranty provisions of ₹ 43,32,300/- and addition on account of suppression of sales of ₹ 70,11,674/-. 9. From perusal of the record, we find that at the time of filing of return of income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x was payable after the completion of assessment proceedings. 10. Now coming to the issue of appeal about penalty imposed u/s 271(1)(c) of the Act for the addition of ₹ 1,13,43,974/- (Rs.43,32,300/- + ₹ 70,11,674/-), we find that ld. CIT(A) has deleted the penalty u/s 271(1)(c) of the Act relying on the decision of Hon. Delhi High Court in the case of CIT vs. Nalwa Sons Investment Ltd. 327 ITR 543. We also observe that SLP filed by the Revenue against the judgment of Hon. Delhi High .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ltd. (supra) which reads as under :- CIRCULAR NO.25/2015 [F.NO.279/MISC./140/2015/ITJ], DATED 31-12-2015 Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act, 2000 with effect from 1-4-2001. 2. Under clause (iii') of sub-section (1) of section 271 of the Act, penalty for concealment of income or furnishing inaccurate particulars of income is determined based on the "amount of tax sought to be evaded" which has been .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ax 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version