ACIT Vs UP State Bridge Corporation Ltd (ITAT Lucknow)
Income Tax Appellate Tribunal (ITAT), Lucknow Bench, has set aside a previous order that deleted a penalty imposed on the UP State Bridge Corporation Ltd. and has restored the matter to the Assessing Officer (AO) for a fresh decision. This development follows a directive from the Hon’ble Allahabad High Court, emphasizing the interdependency of the penalty proceedings with the outcome of the quantum appeal.
The case, dating back to the assessment year 1990-91, involves a penalty of Rs. 1,25,00,000/- imposed under Section 271(1)(c) of the Income Tax Act, 1961, for alleged concealment of income. The assessee, a State Public Sector Undertaking engaged in civil construction, initially declared a loss of Rs. 1,55,68,934/-. Subsequent assessments and rectifications by the Assessing Officer and the Commissioner of Income Tax (Appeals) [CIT(A)] led to fluctuating income figures.
A significant point of contention arose when the CIT-I, Lucknow, under Section 263 of the Act, observed that the AO had not taxed an “Exchange Variation Reserve (EVR)” amounting to Rs. 2,00,62,003/- appearing on the asset side of the assessee’s balance sheet. This led to a final assessment order determining the total income at Rs. 71,28,266/-, which included the EVR addition. Concurrently, penalty proceedings under Section 271(1)(c) were initiated.
