Accurate Finstock Pvt. Ltd., Ahmedabad V. The ACIT, Circle-1(3), Ahmedabad

CO 329/AHD/2014

• Counselvise Citation: [2017] 112 COUNSELVISE.COM (IT) 4507 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Earning of tax free income
• Section: 271(1)(c); 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO. 3177/AHD/2014 & CO NO. 329/AHD/2014 / ASSESSMENT YEAR: 2008-09 ACIT, CIRCLE-1(3), AHMEDABAD VS. ACCURATE FINSTOCK PVT. LTD., 9 TH FLOOR, SHIKHAR, NR. MITHAKHALI CHAR RASTA, NAVRANGPURA, AHMEDABAD PAN: AABCA 9976 B / (APPELLANT) / (RESPONDENT/CROSS- OBJECTOR) REVENUE BY : SHRI MUDIT NAGPAL, SR. DR ASSESSEE BY : SHRI P.M. MEHTA, AR / DATE OF HEARING : 01/08/2017 / DATE OF PRONOUNCEMENT: 02/08/2017 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINS T THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-6, AHMEDAB AD DATED 10.09.2014 PASSED FOR ASSESSMENT YEAR 2008-09. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, THE ASSESSEE HAS FILED CROSS-OBJECTION BEAR ING NO. 329/AHD/2014. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.13,29,986/- IMPOSED B Y THE ASSESSING OFFICER UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 25.08.20 08 DECLARING TOTAL LOSS OF ITA NO. 3177 & CO NO.329/AHD/2014 ASSESSEE : ACCURATE FINSTOCK PVT LTD FOR AY: 2008-09 2 (-)RS.76,71,160/- UNDER THE NORMAL PROVISIONS OF TH E ACT AND SHOWN THE BOOK PROFITS UNDER SECTION 115JB OF THE ACT AT RS.6 ,85,04,787/-. THE ASSESSEE HAD INCLUDED LONG TERM CAPITAL GAIN OF RS. 45,12,874/- WHICH AROSE TO IT ON ACCOUNT OF REDEMPTION OF PREFERENCE SHARES OF ESSAR STEEL LTD. THIS CLAIM OF LONG TERM CAPITAL GAIN WAS INCLUDED I N THE EXEMPT INCOME; HOWEVER, WHEN THE ASSESSING OFFICER CONFRONTED THE ASSESSEE WITH REGARD TO NON-ADMISSIBILITY OF THIS CLAIM, THEN THE ASSESSEE SURRENDERED IT AND ACCORDINGLY AN ADDITION OF RS.45,12,874/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. LD. ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND ULTIMATELY H E IMPOSED A PENALTY OF RS.13,29,986/-. 4. ON APPEAL, IT WAS CONTENDED BY THE ASSESSEE THAT IT HAS SHOWN BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF THE ACT OF RS.6,85,04,787/-. THE ASSESSING OFFICER HAS COMPUTED THE BOOK PROFIT AT R S.8,03,26,050/-, WHEREAS THE ASSESSED INCOME UNDER THE NORMAL PROVISIONS IS AT RS.86,62,977/- AS AGAINST THE RETURNED LOSS OF RS.76,71,160/-. THE TAXES PAYABLE AS PER SECTION 115JB OF THE ACT IS MORE THAN THE PROVISION OTHER T HAN SECTION 115JB OF THE ACT; HENCE THE ASSESSING OFFICER HAS APPLIED MAT IN THIS YEAR. IT WAS FURTHER CONTENDED THAT THE MOMENT TAXES WERE LEVIED ON MAT PROVISION, I.E., ON BOOK PROFIT, THEN THE ASSESSEE CANNOT BE V ISITED WITH PENALTY QUA THE ADDITIONS TO THE INCOME ASSESSED UNDER THE REGULAR PROVISIONS. IN SUPPORT OF ITS CONTENTION, THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD, REPORTED IN [2010] 327 ITR 543 (DELHI). 5. LD. FIRST APPELLATE AUTHORITY HAS ACCEPTED THE C ONTENTION OF THE ASSESSEE AND DELETED THE PENALTY. ITA NO. 3177 & CO NO.329/AHD/2014 ASSESSEE : ACCURATE FINSTOCK PVT LTD FOR AY: 2008-09 3 6. BEFORE US IT WAS CONTENDED THAT THE BOARD HAS AC CEPTED THE POSITION OF LAW DECLARED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD (SUPRA) AND A CIRCULAR BEARING NO.2 5/2015 HAS BEEN ISSUED IN THIS CONNECTION. THE SAID CIRCULAR READS AS UND ER:- CIRCULAR NO. 25/2015 F.NO.279/MISC./140/2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE CENTRAL BOARD OF DIRECT TAXES NEW DELHI, 31ST DECEMBER, 2015 SUBJECT: PENALTY U/S 271(1)(C) WHEREIN ADDITIONS/DI SALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 BUT T AX LEVIED UNDER MAT PROVISIONS U/S 115JB/115JC, FOR CASES PRIOR TO A.Y. 2016-17-REG.- SECTION 115JB OF THE ACT IS A SPECIAL PROVISION FOR LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES, INSERTED BY FINANCE ACT 2000 WITH EFFECT FROM 1-4-2001. 2. UNDER CLAUSE (III) OF SUB-SECTION (1) OF SECTION 271 OF THE ACT, PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME IS DETERMINED BASED ON THE AMOUNT OF TAX SOUGHT TO BE EVADED WHICH HAS BEEN DEFINED INTER-ALIA, AS THE DIFFERENCE BETWEEN THE T AX DUE ON THE INCOME ASSESSED AND THE TAX WHICH WOULD HAVE BEEN CHARGEAB LE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF CONCEALED INCOME OR I NCOME IN RESPECT OF WHICH INACCURATE PARTICULARS HAD BEEN FILED. 3. IN THIS CONTEXT, HONBLE DELHI HIGH COURT IN ITS JUDGMENT DATED 26.8.2010 IN ITA NO.1420 OF 2009 IN THE CASE OF NAL WA SONS INVESTMENT LTD. (AVAILABLE IN NJRS AS 2010-LL-0826-2), HELD TH AT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE IS LESS T HAN THE TAX PAYABLE UNDER THE DEEMING PROVISIONS OF SECTION 115JB OF TH E ACT, THEN PENALTY UNDER SECTION 271(1)(C) OF THE ACT COULD NOT BE IMP OSED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NORMAL PROVISIO NS. THE JUDGMENT HAS ATTAINED FINALITY. 4. SUBSEQUENTLY, THE PROVISIONS OF EXPLANATION 4 TO SUB-SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FINANCE ACT , 2015, WHICH PROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOUGHT TO BE EVADED FOR SITUATIONS EVEN WHERE THE INCOME DETERMINED UNDER T HE GENERAL PROVISIONS IS LESS THAN THE INCOME DECLARED FOR THE PURPOSE OF MA T U/S 115JB OF THE ACT. THE SUBSTITUTED EXPLANATION 4 IS APPLICABLE PROSPEC TIVELY W.E.F. 01.04.2016. ITA NO. 3177 & CO NO.329/AHD/2014 ASSESSEE : ACCURATE FINSTOCK PVT LTD FOR AY: 2008-09 4 5. ACCORDINGLY, IN VIEW OF THE DELHI HIGH COURT JUD GMENT AND SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PRO SPECTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 1/4/2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISION S OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 115JB OF TH E ACT, THEN PENALTY UNDER 271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFEREN CE TO ADDITIONS /DISALLOWANCES MADE UNDER NORMAL PROVISIONS. IT IS FURTHER CLARIFIED THAT IN CASES PRIOR TO 1.4.2016, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THEN THE LEVY OF PENALTY U/ S 271(1)(C) OF THE ACT, WILL DEPEND ON THE NATURE OF ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLOWED IN RESPECT OF SECTION 115JC OF THE ACT ALSO. 7. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT NO AP PEALS MAY HENCEFORTH BE FILED ON THIS GROUND AND APPEALS ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESS ED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. (RAMANJIT KAUR SETHI) DCIT (OSD) (ITJ), CBDT, NEW DELHI IN VIEW OF ABOVE CIRCULAR, THE APPEAL OF THE REVENU E DESERVES TO BE DISMISSED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, WAS UNABLE TO CONTROVERT THIS CONTENTION OF THE LD. COUNSEL FO R THE ASSESSEE. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. IT IS PERTINENT TO OBSERVE THAT PENALTY WAS NOT INITIATED OR IMPOSED TO ANY ADDITION MADE TO THE BOOK PROFIT OF THE ASSESSEE. THE PENALTY WAS INITIATED FOR THE ADDITION MADE TO THE INCOME DETERMINED IN NORMAL PROVISIONS OF THE ACT. SINCE ULTIMATE TAXES HAVE BEEN LEVIED FROM THE ASSESSEE ON THE BASIS OF BOOK PROFIT COMPUTED B Y THE ASSESSING OFFICER, THE PENALTY IMPOSED FOR THE ADDITION MADE TO THE IN COME DETERMINED UNDER THE NORMAL PROVISIONS IS NOT SUSTAINABLE, BECAUSE T HERE CANNOT BE ANY ALLEGATION OF EVASION OF TAX QUA THAT ADDITION BECAUSE NO TAXES WERE LEVIED ON THAT COMPUTATION. THE CIRCULAR ISSUED BY THE CB DT MAKES THIS POSITION ITA NO. 3177 & CO NO.329/AHD/2014 ASSESSEE : ACCURATE FINSTOCK PVT LTD FOR AY: 2008-09 5 VERY CLEAR AND THEREFORE, RESPECTFULLY FOLLOWING TH E JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTME NTS LTD (SUPRA) AS WELL AS THE AFORESAID CIRCULAR, WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE APPEAL OF THE REVENUE IS THUS DISMI SSED. 9. SO FAR AS THE CROSS-OBJECTION IS CONCERNED, IT I S IN SUPPORT OF THE LD. CIT(A)S ORDER. SUB-CLAUSE (4) OF SECTION 253 AUTH ORIZES A RESPONDENT TO FILE THE CROSS-OBJECTION WITHIN 30 DAYS FROM THE RECEIPT OF THE NOTICE AGAINST ANY PART OF THE IMPUGNED ORDER. THE ASSESSEE HAS NOT S HOWN ITS GRIEVANCE AGAINST THE IMPUGNED ORDER AND THEREFORE IT IS NOT MAINTAINABLE. ACCORDINGLY THE APPEAL OF THE REVENUE AND THE CROSS -OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS-OBJECTION FILED BY THE ASSESSEE, BOTH ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 2 ND AUGUST, 2017 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 02/08/2017 BIJU T., SR.PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ' / CONCERNED CIT 4. ' ( ) / THE CIT(A) 5. % , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) ', / ITAT, AHMEDABAD