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2017 (2) TMI 591 - ITAT AHMEDABAD

2017 (2) TMI 591 - ITAT AHMEDABAD - TMI - Penalty u/s 271(1)(c) - not offering correct MAT on the book profit u/s 115JB and non-submission of explanation for claiming expenditure claimed against exempt dividend income and income from house property - Held that:- The assessee has concealed particulars of income by allegedly not calculating MAT u/s 115JB which in the case of assessee was higher than the normal taxes; as the long term capital gain exempted u/s 10(38) of the Act is required to be ad .....

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not filed form 29B statutorily required under the Act to be furnished along with the return of income. We, therefore, uphold the order of ld. CIT(A) confirming the penalty u/s 271(1)(c) of the Act calculated on the tax to be evaded of ₹ 98,79,990/- calculated @ 100% of deemed income u/s 115JB of ₹ 98,79,990/-. - Decided against assessee - Disallowance of expenditure made in the computation of assessee’s total income - Held that:- The impugned expenses have already been disallowe .....

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penses. We, therefore, delete the penalty - Decided against revenue - ITA No. 1275/Ahd/2012 - Dated:- 9-2-2017 - Shri Rajpal Yadav, JM And Shri Manish Borad, AM Appellant by Shri S. N. Soparkar & P. M. Mehta, AR Respondent by Shri Prasoon Kabra, Sr.DR ORDER Per Manish Borad, Accountant Member This appeal of the assessee for Asst. Year 2007-08 is directed against the order of ld. CIT(A)-VIII, Ahmedabad, dated 26.03.2012 vide appeal no.CIT(A)-VIII/ITO/4(3)/86/10-11, arising out of the order u/ .....

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after disallowing administrative expenses and depreciation totaling to ₹ 13,24,563/-. Ld. Assessing Officer observed that assessee has not provided any calculation of book profit u/s 115JB of the Act as the assessee was of the view that income from capital gain at ₹ 8,52,63,544/- which is exempted from tax u/s 10(38) of the Act is not includible in the book profit. Accordingly, ld. Assessing Officer calculated book profit of ₹ 9,87,99,99,018/-. Penalty proceedings u/s 271(1)(c) .....

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377; 13,24,563/- claimed against exempt dividend income and income from house property. 4. Aggrieved, assessee went in appeal before ld. CIT(A) but could not succeed. 5. Assessee is now in appeal before the Tribunal, against penalty imposed u/s 271(1)(c) of the Act at ₹ 98,79,990/- and ₹ 4,63,247/- raising following grounds :- 1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the validity of the penalty order p .....

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ted for the reasons stated in the Synopsis attached herewith. 3. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the levy of penalty of ₹ 4,63,247 u/s. 271(1)(c) in respect of disallowance of expenses made in the computation of the appellant's total income as per the normal provisions of the Income-tax Act, 1961 in total disregard of the fact that the appellant's total income for the present assessment year ha .....

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foregoing, in law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in not adjudicating upon the ground No.4 raised by the appellant before him, which reads as under: "4. Without prejudice to the foregoing, in law and in the facts and circumstances of the appellant's case, the learned Assessing Officer has grossly erred in arriving at the quantum of the penalty of ₹ 1,03,43,237 u/s. 271(1)(c). He ought to have appreciated, inter .....

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facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in .upholding the order levying penalty of ₹ 98,79,990 u/s. 271(1)(c) on the ground that the appellant was guilty of concealment of income inasmuch as it had failed to show in its return the total income pursuance to Section 115JB and instead, merely returned total income as per the normal provisions of the Income-tax Act, 1961. The same may be deleted for the reasons stated in the Synopsis attached .....

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Officer that the provisions of section 115JB of the Act apply in a case where income tax payable on the total income as computed under the Income-tax Act is less than 10% of its book profit as tax payable on the total income and, therefore, assessee did not consider it necessary to furnish computation of book profit. It was further pointed out that assessee proceeded on a bona fide and honest belief. Further provisions of section 115JB of the Act were amended w.e.f. 1.4.2007 which were complete .....

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furnishing of inaccurate particulars of income at any stage. Ld. AR further referred and relied on the judgment of Hon. Delhi High Court in the case of CIT vs. NG Technologies Ltd. (2015) 57 taxmann.com 389 (Delhi) and the judgment of Ho. Punjab & Haryana High Court in the case of CIT vs. Stock Home India Ltd. (2015) 58 taxmann.com 197 (Punjab & Haryana) wherein similar facts were adjudicated by the Hon. Courts and just for the sake of not filing revised return and also for not complyin .....

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nd, ld. Departmental Representative (DR) vehemently argued and supported the orders of lower authorities. 9. We have heard the rival contentions and perused the material placed before us and gone through the decision(s) relied on by the ld. AR. In this ground assessee has challenged ld. CIT(A) s order confirming penalty of ₹ 98,79,990/- u/s 271(1)(c) of the Act by treating assessee as guilty of concealment of particulars of income as it failed to show calculation of income u/s 115JB of the .....

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MAT). However, assessee has claimed exemption u/s 10(38) of the Act but did not file any detail of calculating deemed income u/s 115JB of the Act. More so assessee also did not adher to the statutory requirements of filing of form 29B duly certified by Chartered Accountant, required for calculating book profit u/s 115JB of the Act and MAT so as to pay the higher of normal tax or MAT. 9.2 We further observe that ld. counsel has heavily relied on the judgment of Hon.Punjab & Haryana High Court .....

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115JB and that the assessee has not filed form No. 29B which is required to be filed u/s 115JB(4) of the Act. The assessee had claimed long term capital gains on the sale of securities/shares as exempt u/s 10(38). the profit on long term capital gain is to be added while computing the book profit and tax liability u/s 115JB. The A.O. issued show cause notice in this regard to the assessee. The assessee thereafter revised the computation of income. The AO initiated penalty proceedings u/s 271(l)( .....

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;ble Punjab & Haryana High Court in the case of CIT v. SSP Pvt. Ltd. [1959] 35 ITR 349 (P& H). The explanation of the assessee before the ld. CIT (A) remained that proviso to section 10 (38) of the Act was inserted w.e.f 01.04.2007 and prior to that long term capital gain on shares was not to be considered for applicability of MAT provisions. When this amendment came to the knowledge of the assessee. it immediately obtained the auditors report in the Form No. 29B and filed the same along .....

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, ld. CIT(A) has rightly held that it cannot be said that assessee had concealed particulars of income or furnished inaccurate particulars thereof In the case of CIT v. Reliance Petro Products (P) Lid. (supra] followed by the ld. CIT(A) it has been held that furnishing of inaccurate particulars mean details specified in return which are not exact or correct, not according to truth or erroneous and if the assessee furnishes details of income and expenditure in its return which details in themselv .....

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rior to the insertion of the aforesaid proviso under Section 10(38) of the Act. the long time capital gains on shares was not required to be included while determining the book profits under Section 115.IR of the Act. The said proviso reads thus: "Provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and income-tax payable under section 115.IB." 7. According to it. the long term capital gains on shares is to be i .....

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finding no merit in the appeal, the same is hereby dismissed. 10. We observe that there is no dispute that assessee committed an error by not disclosing correct book profit u/s 115JB of the Act. Further there is also no dispute with regard to the fact that assessee has not furnished form no.29B referred under Rule 40B of the IT Rules which dealt with special provisions of tax of certain companies and requires that a report of an Accountant to be furnished along with the return of income under su .....

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dealt by Hon. Punjab & Haryana High Court in the case of CIT vs. Stock home India Ltd. (supra) are quite similar to the facts of assessee with the only variation that in the case adjudicated by Hon. Punjab & Haryana High Court assessee did not file form no.29B along with return of income but furnished the same during the course of assessment proceedings and also filed the revised return of income paying due taxes. Whereas in the case of assessee neither return was revised along with payi .....

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he case is selected for scrutiny assessment and the necessary details are examined by the Assessing Officer. Certainly if the case of assessee has not been scrutinized then this error committed by the assessee could not have been examined and there would certainly have been loss of revenue to that effect. We are surprised to observe that on one hand assessee is accepting the error committed by it and on the other hand it has not taken any pain to revise the return and to comply with the statutor .....

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alculation of deemed income us 115JB of the Act then what stopped it for not calculating the same for Asst. Year 2007-08 when the MAT was higher than the normal tax. It gives a sound basis to infer that there was a lack of bona fideness and mens rea of concealment of particulars of income because assessee had earned a handsome income on long term capital gain from sale of investment at ₹ 8.53 crores (approx.) and the liability under MAT was much higher than normal tax. If the case of asses .....

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of not filing a revised return along with form no.29B and paying of taxes before finalization of assessment u/s 143(3) of the Act. We further observe that ld. Assessing Officer has given proper reasoning before concluding to impose penalty u/s 271(1)(c) of the Act by observing as follows :- (i) The assessee has not offered MAT income in its statement of income. (ii) The assessee has not paid tax on MAT income. (iii) The assessee has not given comparative figures of tax payment on regular income .....

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though it was done in every year on regular basis. The non-mentioning of working of MAT income though less than regular income shows that the assessee was wanted to hide its MAT income. This particular attitude of assessee is enough to prove that the assessee has not committed any mistake but meaningfully avoided showing income u/s. 115JB of the IT Act. 13. We further observe that ld. CIT(A) has also confirmed the penalty by observing that the appellant company had furnished inaccurate particula .....

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of assessee was higher than the normal taxes; as the long term capital gain exempted u/s 10(38) of the Act is required to be added in the book profits for the purpose of calculating MAT. Assessee is also guilty for the fact that it was well aware of the provisions of section 115JB of the Act as it has been consistently furnishing details of the same in the previous Asstt. Years wherein normal tax was higher than the MAT but in the year under appeal wherein tax u/s 115JB of the Act was ₹ 1 .....

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of assessee s appeal is dismissed. 15. Ground no.3 reads as under :- 3. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the levy of penalty of ₹ 4,63,247 u/s. 271(1)(c) in respect of disallowance of expenses made in the computation of the appellant's total income as per the normal provisions of the Income-tax Act, 1961 in total disregard of the fact that the appellant's total income for the present assessment .....

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ated to this ground are that during the course of assessment proceedings ld. Assessing Officer observed that assessee has claimed various expenses of ₹ 13,24,563/- against gross revenue which included dividend, long term capital gain, income from house property. It was also observed that assessee was not carrying any regular business activities and even under the head business activities it was mentioned - During the year, we have earned rent income and dividend income. We have also earned .....

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grieved, assessee is now in appeal before the Tribunal. Ld. AR referring to the audited financial statements and profit and loss account as well as computation of income submitted that ld. Assessing Officer erred in observing that assessee had no income under the head profit and gains of business by completely ignoring the fact that assessee has shown positive income of ₹ 2,06,595/- as business income. Further expenses claimed by assessee are of general administrative nature incurred in me .....

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ssing Officer. 18. Ld. DR vehemently argued supporting the orders of lower authorities. 19. We have heard the rival contentions and perused the material placed on record. Through this ground no.3 assessee is aggrieved with the order of ld. CIT(A) upholding levy of penalty of ₹ 4,63,247/- u/s 271(1)(c) of the Act in respect of disallowance of expenditure made in the computation of assessee s total income. We observe that assessee is incorporated since 1986 and is regularly filing return of .....

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77; 2,91,780/- which has been calculated on the office building, office equipment, furniture etc. used in the normal running of business. Apart from that assessee has disallowed demat charges and security transaction tax. The ld. Assessing Officer disallowed a sum of ₹ 13,24,563/- being expenditure claimed during the year on the basis of his observation that assessee is not carrying on any business activity and has concealed the particulars of income by claiming the impugned expenditure of .....

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