Case Law Details
CA Sandeep Kanoi
Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is legally justified in cancelling the penalty levied under Section 271(1)(c) in spite of the fact that the assessee did not furnish any explanation either before the Assessing officer or before the Commissioner of Income Tax(A) for claiming excess depreciation than admissible under Income Tax Act and Explanation I to Section 271(1)(C) clearly states that where in respect of any facts material to the computation of income of any person, such person fails to offer an explanation, the amount added in computing the total income of such person shall for the purpose of section 271(1)(c) , be deemed to represent the income in respect of which particulars have been concealed?
He further submitted that for the purposes of levy of penalty the book profit for the purpose of determination of liability under Section 115 J is relevant and not the Income as per the Income Tax Act and since the book profit disclosed by the assessee for the purpose of levy of tax under Section 115 J has been accepted the Tribunal has rightly deleted the penalty as there was no concealment . Reliance has been placed on the Division Bench decision of this Court in the case of Commissioner of Income Tax Vs Noida Vs Aleo Manali Hydro Power P LTd (2013)38.com288( and submitted that the decision of the this Court is based on the decision of Delhi High Court in the Case of Commissioner of Income Tax Vs Nalwa Sons Investments Ltd (2010)327 ITR page 543) against which SLP was dismissed by Apex Court .
This Court while dealing with the penalty under Section 271(1)(c) Commissioner of Income Tax Vs Aleo Manali Hydro Power (P Limited has held as follows:
“The Delhi High Court held that in respect of 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 115-JB resulted in calculation of profit at Rs. 4,01,63,180/-. The income of the assessee was thus assessed under Section 115-JB 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 u/s 115JB which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed u/s 115JB. Hence, when the computation was made u/s 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on different grounds. Therefore, while the reasoning and approach of the Tribunal is not tenable, for the reasons disclosed above, penalty could not have been imposed even in respect of the false claim of depreciation made by the assessee. CIT Vs. Gold Coin Health Food (P) Ltd., (2008) 218 CTR (Supreme Court 359: (2008) 11 DTR (Supreme Court 185: (2008) 304 ITR 308 (Supreme Court distinguished.”
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