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TMI Blog2024 (9) TMI 1674X X X X Extracts X X X X X X X X Extracts X X X X ..... d taxes on income computed as per the normal provisions of the Act and had claimed the long term capital gains as exempt in terms of section 10(38) of the Act, thus paying taxes far less than what it was required to pay on its Book Profits computed as per section 115JB of the Act. ii) Disallowance of certain expenses claimed by the assessee while computing its income under the normal provisions of the Act. 3. The ITAT, in its order passed, deleted the penalty levied on the second issue, while it confirmed the penalty levied on the first issue. It is in this order passed by the ITAT that the assessee now seeks rectification. And the present application seeks rectification primarily on two counts viz. i) That ground no.1 raised, challenging the validity of the penalty order passed, was not adjudicated by the ITAT treating it as a general in nature; ii) That while confirming the levy of penalty on the first issue; a. specific averments made by the ld. counsel for the assessee were not dealt with and b. Findings of the ITAT are based on incorrect assumption of fact and law . 4. Vis-à-vis the aspect of ground not being dealt with by the ITAT, it was pointed out that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inaccurate particulars of income, and he pointed that law is well settled in this regard that when the notice initiating penalty proceedings does not specify the charge for levy of penalty the order passed as a consequence is invalid and not sustainable in law. Our attention as drawn to the decision of the Hon'ble jurisdictional High Court in the case of CIT Vs. Manu Engineering Works, (1980) 122 ITR 306 (Guj), CIT Vs. Whiteford India Ltd., (2013) 38 taxmann.com 15 (Guj) and New Sortathia Engg. Co. Vs. CIT, (2006) 282 ITR 642 (Guj). 5.2 His contention, therefore, was that the order passed by the ITAT, not dealing with the legal ground raised by the assessee, treating it as a general in nature, without considering specific averments made by the assessee in this regard, and ignoring the documents filed by it, was a mistake apparent from record, and therefore, he pleaded that the order passed by the ITAT be vacated, and the appeal be restored for de novo disposal and hearing in accordance with law. 6. The ld.DR on the other hand, did not controvert the fact that the ITAT had treated the ground no.1 raised by the assessee as being general in nature, but at the same time, he pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s present application is with respect to the non-consideration of the pleadings made by the assessee during the course of hearing on ground no.2 raised by the assessee and the ITAT ruling against the assessee assuming incorrect facts and law. 10. On this aspect, the ld. counsel for the assessee pointed out that the issue for adjudication before the ITAT was levy of penalty on being found liable to pay taxes on its Book Profits which the assessee had failed to do. It was pointed out that in assessment proceedings for the impugned year, it was noted that the assessee had computed its income as per the normal provisions of the Act, claiming income earned on long term capital gains as exempt from taxes and had paid taxes accordingly. The AO held the assessee liable to pay taxes on its Book Profits including the component of income claimed exempt in terms of provisions of section 115JB of the Act. The quantum of long term capital gain so involved amounted to Rs. 9,52,73,544/-. Accordingly, in the assessment order passed under section 143(3) of the Act, the AO computed the book profits of the assessee at Rs. 9.87 crores, while the income as per the normal provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including exempt long term capital gains in book profits only with effect from the impugned year, and the assessee had therefore, mistakenly not included the same for the computation of its book profits; that when confronted with this aspect during the assessment proceedings, the assessee surrendered the same and did not challenge the order of the AO before the ld.CIT(A). 12. The ld. counsel for the assessee further contended that the finding of the ITAT that bona fide of the assessee are doubtful for the reason that it had not revised its return and filed Form no.29B read with section 115JB of the Act, was also incorrect findings on law. He pointed out that during the course of hearing, the assessee had referred to the decision of the Punjab & Haryana High Court in the case of CIT Vs. Stock Home India Ltd. stating that the issue of levy of penalty on non-inclusion of exempt long term capital against in the book profits of the assessee, was clearly covered in favour of the assessee by this decision. The ld. counsel for the assessee contended that the ITAT distinguished this decision on facts stating that in the said decision, the Hon'ble High Court noted the assessee to have filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lapse on its part during assessment proceedings. Ld.DR was unable to controvert this contention of the Ld. Counsel for the assessee. Clearly the distinction made for not applying the decision of the Hon'ble High court has been demonstrated to be incorrect. 17. Also while finding the assessee to have acted malafidely by not paying taxes on book profits by including therein exempt long term capital gain, the ITAT we have noted has not dealt with the explanation of the assessee that inclusion of exempt capital gain in Book Profits was by way of amendment in law applicable from the impugned year onwards and therefore missed out for its consideration. We agree with the Ld. Counsel for the assessee that there was a mistake apparent on record in the order of the ITAT finding the assessee to have acted malafidely by only considering the fact that the assessee had consistently been disclosing computation of book profits as per section 115JB of the Act in preceding years while not doing so in the impugned year, without dealing with the aforestated explanation of the assessee of exempt income being included in Book Profits being a recent amendment. This explanation of the assessee not only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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