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TMI Blog2018 (10) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... craves to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal". 2 At the outset of hearing the Ld. DR also filed revised grounds of appeal which are as under :- l."Ld. CIT (a), ahs erred in law and on facts that the calculation of Tax u/s 115JB made by AO is on the fact that assessee violated section 10(38) in which as per clause (II) clearly bars reduction of income from book profit to which the provision contained in section 10 (38) applies. 2.Ld. CIT(A) has erred in law and on facts that assessee has disclosed its book profit while filing revised computation of income after receiving the notice u/s 143(2) and not added disallowances made u/s 14(A) tom its book profit as required under clause (F) of explanation of sec 115JB. 3."The Ld. CIT(A) has erred on facts and in law in cancelling the penalty of Rs. 34,55,511/- imposed ii]» 271(1)(c) of the Act despite the fact that assessee has concealed the particulars of its income u/s 115JB by furnishing inaccurate particulars of book profit calculated u/s 115JB on the below mentioned points: (a) The addition to book profit was made on the ground that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved from the order of the Ld. AO the assessee appealed before the Ld. CIT(A) and he made detailed submissions and relied some case laws also. Ld. CIT(A) after considering all the submissions of the assessee and order of the AO allowed the appeal of the assessee. 4. Aggrieved from the order of the Ld. CIT(A) the revenue is in appeal before the ITAT. 5. Ld. DR submitted that the Ld. AO had rightly imposed the penalty on the difference in book profits computed during the course of assessment proceedings. Had it not been taken up for scrutiny the assessee would have escaped therefore the Ld. AO has rightly imposed the penalty u/s 271(1)(c) of the Income Tax Act. Therefore, order of the AO should be restored. He also submitted a written submission which is as under. In this case, the Department has filed appeal contesting the deletion of penalty u/s 271 (1 )( c) of Rs. 3455511/- which was levied. The penalty in these case levied as additions were made on account of adding/inclusion of long term capital gain claim exempt u/s 10(38) amounting to Rs. 1,77,74,907/- and disallowance u/s 14A at Rs. 2,36,105/-. The CIT (A) held that assessee has filed revised computation of book profi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and explanation furnished by him for making such a claim is not found to be bona fide, Explanation 1 to section 271 (1 )(c) would come into play and assessee will be liable to penalty 4. CIT Vs Moser Baer India Ltd. (184 Taxman 8 (SC)/[2009] 315 ITR 460 (SC)/[2009] 222 CTR 213) (Copy Enclosed) where Hon'ble Supreme Court confirmed Penalty under section 271 (1 )(c) for wrong adjustment of Unabsorbed Depreciation. 5. 'CIT Vs Gold Coin Health Food (P.) Ltd (172 Taxman 386 (SC)/[2008] 304 ITR 308 (SC)/[2008] 218 CTR 359) (Copy Enclosed) where Hon'ble Delhi Supreme Court held that amendment made in Explanation 4 to section 271(1)(c)(iii) with effect from 1-4-2003 is clarificatory and, therefore, will have retrospective effect. Penalty u/s 271 (1 )(c) could be /vied in case of loss return v. MAK Data P. Ltd vs. CIT [38 taxmann.com 448 (SC)I[2013] 358 ITR 593 (SC)/[2013] 263 CTR 1 ] Where Hon'ble Supreme Court held that Under Explanation 1 to s. 271 (1 )(c), voluntary disclosure of concealed income does not absolve assessee of s. 271 (1 )(c) penalty if the assessee fails to offer an explanation which is bona fide and proves that all the material facts ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncealment of true income chargeable to tax by making bogus claim, levy of penalty u/s 271 (1 )(c) read with Explanation 1 is justified . 10.CIT Vs Escorts Finance Ltd [183 Taxman 453 (Delhi)/[2010] 328 ITR 44 (Delhi)/[2009] 226 CTR 105] where Hon'ble Delhi High Court held that if claim made in return of income appears to be ex facie bogus, it would be treated as a case of concealment or furnishing of inaccurate particulars and penalty proceeding would be justified, 11.CIT Vs R.M.P. Plasto (P.) Ltd [184 Taxman 372 (SC)/[2009] 313 ITR 397 (SC)/[2009] 227 CTR 635] where Hon'ble Supreme Court held that Confirmed penalty upon assessee for concealment of income under section 271(1)(c) because positive income of assessee was reduced to nil after allowing set-off of carried forward losses of earlier years 12. K.P. Madhusudhanan Vs CIT [[2001] 118 Taxman 324 (SC)/[2001] 251 ITR 99 (SC)/[2001] 169 CTR 489 (SC)] where Hon'ble Supreme Court held that where assessee was unable to furnish evidence for loans and it offered amount of transaction as additional income, Assessing Officer was justified in imposing penalty u/s271 (1 )(c) after finding the explanation to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared dividend, interest income, profit on sale of investment and other income against the Col. No.2 of Part A - P & L A/c. However, while filling the return in Schedule El, interest income was correctly shown and long term capital gains were also correctly shown. but dividend income which was separately shown against the Col. 2(C) of part A - P & L A/c was not mentioned in the Schedule EI. Ld. AR of the appellant pleaded that there was no malafide intention to calculate the wrong book profit. While filing the Schedule El, dividend income was omitted. In the Schedule of MAT against col No.3 profit before tax was clearly mentioned. But while showing the deduction against the CoI.No.5B, income exempt u/s 10, 10AA, 11 or 12 [exempt income excludes income exempt u/s 10(38)].The figure was wrongly taken. The figure mentioned against this column Rs. 2, 16, 18,411/- includes the exempted dividend income of Rs. 22,32,719/-. While filling this column, the office has only taken the exempted income u/s 10, however, the exempted income u/s 10(38) was not excluded. Due to this, the omission occurred at the time of calculation of MAT. It was unnoticed till the notice issued by the Ld. AO for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has not disclosed all facts which are material to computation of its income. Further the entire information on the basis of which book profit has been calculated is duly submitted by the appellant in its return of income itself and after inducing the mistake, same was rectified. Since it was a computational error in its return of income and the fact that the various components of the computation of book profit was disclosed in the return of income, imposition of penalty is not justified . (ii) I agree all these facts and find that the Ld. Assessing Officer has not noticed the error in computing the book profit. When first notice was given by the Ld. Assessing Officer, this fact was not mentioned in the questionnaire. The appellant has suo motto rectified the mistake and also informed the Ld. Assessing Officer and paid the taxes accordingly. The expenditure calculated u/s 14A was also reduced, however, it is a debatable issue because appellant was not claiming any expenditure on exempted income. However, the Ld. Assessing Officer has calculated the expenditure u/s 14A on account of exempted income declared in the return of income. Since it was a mere dispute between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14) in ITA No. 73 OF 2001 , 365 ITR 225 (All.) held as under : "This court, while dealing with the penalty under section 271(1)(c), in A/eo Manali Hydro Power (P) Ltd. (supra) has held as follows (page 527) : "The Delhi High Court held that in respect of the company in question on the basis of normal provision income was assessed at negative, i.e., on loss of Rs. 36,95,21,018. The company was MAT company and that the assessment under section 115JB resulted in calculation of profit at Rs. 4,01,63,180. The income of the assessee was thus assessed under section 115JB and not under normal provision. It was held 'no doubt, there was concealment 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 115JB 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. Hence, when the computation was made under section 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 271(1)(c). [Para 9.3] Moreover, the act of furnishing inaccurate particulars of income/concealing particulars of income is to be seen in relation to the point of time when the return is filed. In the instant case, as on the date of filing return of income the figure of brought forward MAT credit of assessment years 2008-09 and 2009-10 was as per returned income, which was correct, since no assessment for those years was framed till then. It was only thereafter that the assessments for assessment years 2008-09 and 2009-10 were framed. Therefore, vis-a-vis the return filed no inaccurate particulars were furnished. In any case the only impact of the reduction in the figure of brought forward MAT credit has been a consequential reduction in the figure of MAT credit carried forward. The same has not effected the tax payable by the assessee. [Para 9.4] The revenue's argument that the assessee ought to have rectified its return is not relevant for the purpose of levy of penalty under section 271(1)(c). The concealment of particulars of income/furnishing inaccurate particulars of income for the purpose of levy of penalty has to be with respect to the return already filed. The Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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