Case Law Details
Flemingo Travel Retail Limited Vs DCIT (ITAT Mumbai)
The issue under consideration is whether the penalty notice u/s 271(1)(c) issued to the assessee who has taxed his income as per provision of section 115JB or 115JC is justified in law?
ITAT states that, the legislature observed that in a case where tax was paid by an assessee under the deeming provisions of Sec. 115JB or 115JC, the excess of such tax paid over and above its tax liability under the general provisions would thereafter be available as credit for set off against its future tax liability. On the said premises, it was observed that in a case of understatement of income under the general provisions of the Act, would thus, result in larger amount of such credit becoming available to the assessee for set off in future years. Accordingly, it was observed that, where concealment of income as computed under the general provisions has taken place, penalty under clause (c) of sub-section (1) of section 271 should be leviable even if the tax liability of the assessee for the year has been determined under provisions of section 115JB or 115JC of the Income-tax Act. But then, we find that the said amendment to” “Explanation 4” to Sec. 271(1)(c) had explicitly been provided to be effective from 1st April, 2016 and thus will accordingly apply, in relation to the assessment year 2016-17 and subsequent assessment years. As the case of the assessee before us is for A.Y 2014-15 therefore, the post-amended “Explanation 4 to Sec. 271(1)(c) would not be applicable in its case. As the issue involved in the present case is squarely covered by the judgment of the Hon’ble High Court of Delhi in the case of CIT Vs. Nalwa Sons Investments Ltd. (2010) 327 ITR 543 (Del), ITAT thus respectfully follow the same. As such, now when the assessee company had been assessed to tax under the deeming provisions of Sec. 115JB of the Act, therefore, on the basis of our aforesaid observations no penalty u/s 271(1)(c) in respect of additions/disallowances made under the normal provisions of the Act could have been imposed upon the assessee. ITAT thus in the backdrop of our aforesaid deliberations quash the penalty imposed by the A.O u/s 271(1)(c) of the Act. Accordingly, the appeal is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-16, Mumbai, dated 27.12.2019 which in turn arises from the order passed by the A.O under Sec.271(1)(c) of the Income Tax Act, 1961 (for short ‘Act’), dated 29.06.2017. The assessee has assailed the impugned order on the following ground of appeal before us:
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