New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2017 (1) TMI 625 - ITAT DELHI

2017 (1) TMI 625 - ITAT DELHI - TMI - Levying the penalty u/s. 271(1)(c) - adjustment to the Book Profit as well as to the normal computation of the total income - Additions have been confirmed and accepted by the assessee - Held that:- The issue of disallowance has already reached finality in the hands of the assessee for both the assessment years against the assessee. It is a settled principle of law that where there are two opinions on allowability of expenditure , it makes it debatable and o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

URT ] - Whether the assessee files an appeal or did not contest the addition or disallowance at higher forums , it does not have any bearing on the statutory provisions of section 271(1) ( c) of the I.T. Act, 1961In view of this, we do not incline to uphold the order of the AO on levy of penalty under section 271(1) ( c) of the I.T. Act, on advance against depreciation disallowed while computing the Book Profit under section 115JB of the I.T. Act as well as under the normal computation of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ome have not been shown by the assessee for tax purposes. Subsequently, on the submission of the assessee, sum have been added to the income of the assessee for the assessment year 2007-08. On that basis, the addition was made in assessment year 2005-06. In the present case, the accrual of the income itself is in doubt when the payee has provided the same, but the payer has not admitted the liability. Further, the Assessee itself has brought on record before the AO that as the same amounts have .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ded in favour of assessee - ITA Nos. 189 & 191/Del/2013 - Dated:- 9-1-2017 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACOUNTANT MEMBER For The Appellant : Sh. R.S. Rawal, CIT(DR) Respondent : Sh. Ved Jain, Adv. and Sh. Ashish Chadha, CA ORDER PER H.S. SIDHU, J.M. 01. These are the two appeals filed by the revenue for assessment years 2006-07 and 2005-06 respectively against the order of the Ld. CIT(A)-XVII, New Delhi dated 30.10.2012 and 31.10.2012 wherein penalty u/s. 271(1 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s 271(1)(c) of the I T Act, 1961. 2. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in ignoring the fact that AO had no initiated penalty proceedings u/s 271(1)(c) in the assessment order while framing assessment. Initiation of penalty proceedings is clearly mentioned in the assessment order and a valid notice was served upon the assessee. 3 Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in appreciating the that the sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rs and also assessee had withdrawn the appeal from Hon'ble ITAT on this ground by accepting the stand on the Revenue on this ground. 5 The appellant craves to be allowed to add any fresh grounds of appeal and / or delete or amend any of the grounds of appeal." ASSESSMENT YEAR : 2005-06 1. "Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in deleting penalty of ₹ 8.06 crores u/s 271 (1)( c) of the I T Act, 1961. 2. Whether on the facts & .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r the case. The assessee confirmed that order of penalty was time barred without examine the facts of the case and a misstated argument of the assessee before the AO, the assessee never argued on this issue. 4. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that not credit of income in the P&L a/c tantamount to concealment of income. The appellant has taken the ground that the AO did not specify the nature of default for whi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the Revenue on this ground. 6. Whether on the facts & in the circumstances of the case, the Ld. CIT(A) has erred in allowing relief on amount of addition on account of SEB and NER Constituent when the assessee did not contested this addition even in quantum appeal on assessment completed under section 143(3). 7. The appellant craves to be allowed to add any fresh grounds of appeal and / or delete or amend any of the grounds of appeal." 03. Though the Revenue has raised 6 effective g .....

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 from State Electricity Board of ₹ 1.53 Crores and Transmission charges of ₹ 12.09 crores would invite penalty u/s 271(1) (c) of the act under the charge of Furnishing inaccurate particulars of income . 04. The brief facts of the case for assessment year 2005-06 is that assessee is a Public Sector Undertaking engaging in transmitting power to State Electricity Board from generating units. For the year under consideration, it filed its return of income at Rs. NIL, however, paid taxes .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

originally initiated were adjudicated upon by the AO vide order dated 27.8.2012 levying the penalty of ₹ 7,77,18,59,200/-. The main reason for levy of penalty was that the assessee had not preferred the appeal and the amount has been added, hence, the penalty is leviable holding that assessee has furnished the inaccurate particulars of its income. The assessee being aggrieved with the order of the ld. AO preferred an appeal before the Ld. CIT(A) against the order of penalty. The Ld. CIT(A) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

her stated that as the accrual of the income is not certain income was not recognized and therefore, on this sum the penalty is not leviable. However, AO levied the penalty on all these additions/disallowances. The Ld. CIT(A) has deleted the penalty on these two additions also for the reasons that the same has been explained in the assessee s Notes on Account No. 14(d) and 17 and further ordered that this income in assessment year 2007-08, there is no concealment of income on the part of the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome tax recovery and transmission charges recovery, the addition has been made in subsequent years as accepted by the assessee; the AO is correct in levying the penalty u/s. 271(1) ( c ) of the I.T. Act on account of adjustment to the Book Profit as well as to the normal computation of the total income. He further submitted that the assessee has not agitated this issue at the higher forum and has withdrawn the Appeal before the Tribunal itself shows that assessee has claimed these deductions w .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

CIT(A) has rightly deleted the penalty u/s. 271(1)(c) of the Act. He further submitted that on the income tax recoverable, the Ld. CIT(A) has held that as assessee has disclosed the full facts in the Notes on Account, hence, the penalty was deleted. He further submitted that merely withdrawal of the appeal by the assessee before the Coordinate Bench does not advance or hamper the case of the assessee as far as the issue of levy of penalty is concerned. He further submitted that after the withdr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in earlier years and no penalty has been initiated on this account. With respect to other additions, he submitted that there is a complete disclosure of these two incomes in the Notes on Accounts of the assessee. He further advanced his arguments holding that the assessee is a Public Sector Undertaking and question of any malafide cannot be attributed. With respect to the Book adjustment, he referred to the decision of the Hon ble High Court in the case of CIT vs. Nalwa Sons Investment Ltd. 327 .....

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 advance against depreciation is in case of electricity company. The Hon ble Supreme Court of India in the case of NHPC vs. CIT 320 ITR 374 (SC) vide para no. 11 has held as under:- 11. Since the amount of ADD is reduced from sales, there is no debit in the profit and loss account, the amount did not enter the stream of income for the purposes of determination of net profit at all, hence clause (b) of Explanation 1 was not applicable. Further, reserve as contemplated by clause (b) of Explanatio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der obligation, right from the inception, to get adjusted in the future, hence, cannot be designated as a reserve. AAD is nothing but an adjustment by reducing the normal depreciation includible in the future years in such a manner that at the end of the useful life of the plant (which is normally 30 years) the same would be reduced to nil. Therefore, the assessee cannot use the AAD for any other purpose (which is possible in the case of a reserve) except to adjust the same against future deprec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

AD is not a reserve. 08. According to the above decision of the Hon ble Supreme Court advance against depreciation is an income received in advance and therefore, is not hit by Clause (b) while working out the Book Profit of the assessee for the purpose of Income Tax Returns u/s 115JB of the act. Subsequently, the Coordinate Bench vide order dated 30.9.2014 decided the issue with respect to disallowance of the same in the normal computation of total income. The relevant facts were stated at par .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

normal computation of total income. Apparently, in the case of the assessee the addition in both the method of computation of total income this amount has been made i.e. normal computation as well as computation under section 115JB of the Act. We are not on the issue of disallowance or addition while determining the income of the assessee, but on the levy of penalty u/s 271(1) (c) of the act on these disallowances accepted by the assessee. The issue of disallowance has already reached finality 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

said that assessee has furnished inaccurate particulars of income. Hence on this disallowance penalty u/s 271(1) ( c) cannot be levied. Hon Supreme court in case of CIT V Reliance Petro products Limited [322 ITR 158] (SUPREME COURT ) has held that 10. We are not concerned in the present case with the mens rea. However, we have to only see as to whether in this case, as a matter of fact, the assessee has given inaccurate particulars. In Webster's Dictionary, the word "inaccurate" ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat any details supplied by the * [2007] 291 ITR 519 (SC). ** [2008] 306 ITR 277 (SC). assessee in its return were found to be incorrect or erroneous or false. Such not being the case, there would be no question of inviting the penalty under section 271(1)(c) of the Act. A mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate par .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deductions knowing that they are incorrect ; it amounted to concealment of income. It was tried to be argued that the falsehood in accounts can take either of the two forms ; (i) an item of receipt may be suppressed fraudulently ; (ii) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lty under section 271(1)(c). If we accept the contention of the Revenue then in case of every return where the claim made is not accepted by the Assessing Officer for any reason, the assessee will invite penalty under section 271(1)(c). That is clearly not the intendment of the Legislature. 13. In this behalf the observations of this court made in Sree Krishna Electricals v. State of Tamil Nadu [2009] 23 VST 249 as regards the penalty are apposite. In the aforementioned decision which pertained .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hich are not included in the turnover are disclosed in the dealer's own account books and the assessing authorities includes these items in the dealer's turnover disallowing the exemption, penalty cannot be imposed. The penalty levied stands set aside." 09. In the present case, the claim of the asssessee is not at all disallowable Therefore it stands on better footing than the case decided by honourable Supreme court in above case. Furthermore, we do not find any provisions under se .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n disallowed while computing the Book Profit under section 115JB of the I.T. Act as well as under the normal computation of total income. In view of this, we do not find any infirmity in the order of the Ld. CIT(A) in cancelling the penalty levied by the AO. 10. With respect to other disallowances of Income Tax recovery and Transmission charges, we are of the opinion that both these issues were amply disclosed in Note No. 14(d) and 17 of the Audited Accounts of the assesee. These Notes also show .....

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