Indian Chronicle Ltd., Ahmedabad V. The Income tax Officer,Ward-4(3), Ahmedabad

ITA 1275/AHD/2012

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9243 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P.M. MEHTA
• Keywords: Business income; Depreciation; Earning of tax free income; Deemed to accrue or arise in india; Question of law; Revised return; Capital Gains
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 271(1)(c); 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 115JB; 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM & SHRI MANISH BORAD, AM. ITA NO.1275/AHD/2012 ASST. YEAR: 2007-08 INDIAN CHRONICLE LTD., GUJARAT SAMACHAR BHUVAN, KHANPUR, AHMEDABAD. VS. ITO, WARD -4(3), AHMEDABAD. APPELLANT RESPONDENT PAN AAACI 0793H APPELLANT BY SHRI S. N. SOPARKAR & P. M. MEHTA, AR RESPONDENT BY SHRI PRASOON KABRA, SR.DR DATE OF HEARING: 01/12/2016 DATE OF PRONOUNCEMENT: 09/02/2017 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE FOR ASST. YEAR 2007-08 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-VIII, AHMEDABAD, DA TED 26.03.2012 VIDE APPEAL NO.CIT(A)-VIII/ITO/4(3)/86/10-11, ARISI NG OUT OF THE ORDER U/S 271(1)(C) OF THE IT ACT, 1961 (IN SHORT THE ACT ) FRAMED ON 20/05/2010 BY ITO, WD-4(3), AHMEDABAD. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESS EE IS A LIMITED COMPANY. E-RETURN FOR ASST. YEAR 2007-08 WAS FILED ON 30.10.2007 DECLARING TOTAL INCOME OF RS.62,90,780/-. CASE WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS AND NOTICE U/S 143(2 ) OF THE ACT ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 2 WAS ISSUED ON 9/9/2008 AND SERVED ON THE ASSESSEE. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.11.2009 A T RS.76,15,338/- AFTER DISALLOWING ADMINISTRATIVE EXPENSES AND DEPRE CIATION TOTALING TO RS.13,24,563/-. LD. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS NOT PROVIDED ANY CALCULATION OF BOOK PROFIT U/S 115 JB OF THE ACT AS THE ASSESSEE WAS OF THE VIEW THAT INCOME FROM CAPITAL G AIN AT RS.8,52,63,544/- WHICH IS EXEMPTED FROM TAX U/S 10( 38) OF THE ACT IS NOT INCLUDIBLE IN THE BOOK PROFIT. ACCORDINGLY, LD. ASSESSING OFFICER CALCULATED BOOK PROFIT OF RS.9,87,99,99,018/-. PENA LTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED. NO APPEAL AGAI NST QUANTUM ADDITION WAS FILED BY ASSESSEE BEFORE LD. CIT(A). 3. DURING PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT ASSESSEE MADE VARIOUS ARGUMENTS BUT THE SAME WERE BRUSHED AS IDE BY LD. ASSESSING OFFICER AND PENALTY U/S 271(1)(C) OF THE ACT WAS IMPOSED AT RS.98,79,990/- FOR NOT OFFERING CORRECT MAT ON T HE BOOK PROFIT U/S 115JB OF THE ACT AND ALSO IMPOSED PENALTY OF RS.4,6 3,247/- FOR NON- SUBMISSION OF EXPLANATION FOR CLAIMING EXPENDITURE OF RS.13,24,563/- CLAIMED AGAINST EXEMPT DIVIDEND INCOME AND INCOME F ROM HOUSE PROPERTY. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) BUT COULD NOT SUCCEED. 5. ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL, A GAINST PENALTY IMPOSED U/S 271(1)(C) OF THE ACT AT RS.98,79,990/- AND RS.4,63,247/- RAISING FOLLOWING GROUNDS :- ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 3 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE V ALIDITY OF THE PENALTY ORDER PASSED BY THE ASSESSING OFFICER. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES O F THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN .UPHOLDING THE ORDER LEVYING PENALTY OF RS.98,79,990 U/S. 271(1)(C) ON THE GROUN D THAT THE APPELLANT WAS GUILTY OF CONCEALMENT OF INCOME INASM UCH AS IT HAD FAILED TO SHOW IN ITS RETURN THE TOTAL INCOME PURSU ANCE TO SECTION 115JB AND INSTEAD, MERELY RETURNED TOTAL INCOME AS PER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT, 1961. THE SAME MA Y BE DELETED FOR THE REASONS STATED IN THE SYNOPSIS ATTACHED HER EWITH. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES O F THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE L EVY OF PENALTY OF RS.4,63,247 U/S. 271(1)(C) IN RESPECT OF DISALLOWAN CE OF EXPENSES MADE IN THE COMPUTATION OF THE APPELLANT'S TOTAL IN COME AS PER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT, 1961 IN TO TAL DISREGARD OF THE FACT THAT THE APPELLANT'S TOTAL INCOME FOR THE PRESENT ASSESSMENT YEAR HAVING BEEN DEEMED TO BE EQUAL TO THE BOOK PRO FIT PURSUANT TO THE PROVISIONS OF SECTION 115JB, THE IMPUGNED DISAL LOWANCE OF EXPENDITURE HAD NO BEARING IN ARRIVING AT THE APPEL LANT'S TAX LIABILITY AND IN TURN, IN ARRIVING AT THE AMOUNT OF TAX ALLEG ED TO HAVE BEEN EVADED AS ENVISAGED BY CLAUSE (III) OF SECTION 271( 1) WHICH FORMED THE VERY BASIS FOR ARRIVING AT THE QUANTUM OF THE PENALTY. THE SAME MAY BE DELETED FOR THE REASONS STATED IN THE SYNOPS IS ATTACHED HEREWITH. 4. WITHOUT PREJUDICE TO THE FOREGOING, IN LAW AND I N THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT ADJUDICATING UPON THE GROUND NO.4 RAIS ED BY THE APPELLANT BEFORE HIM, WHICH READS AS UNDER: '4. WITHOUT PREJUDICE TO THE FOREGOING, IN LAW A ND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED ASSESSING OFFICER HAS GROSSLY ERRED IN ARRIVING AT THE QUANTU M OF THE PENALTY OF RS. 1,03,43,237 U/S. 271(1)(C). HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT EVEN IF IT WERE ASSUMED, FOR THE S AKE OF ARGUMENT ONLY, THAT ANY LEVY OF PENALTY U/S. 271(1)(C) COULD AT ALL BE JUSTIFIED, THE QUANTUM OF PENALTY, EVEN ON HIS OWN STAND, HAD TO BE FAR LESS THAN THE AMOUNT LEVIED BY HIM.' ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 4 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND/ OR ALTER THE GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF H EARING OF THE APPEAL. 6. GROUND NO.1 IS OF GENERAL NATURE, WHICH NEEDS NO ADJUDICATION. 7. GROUND NO.2 READS AS UNDER :- 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN .UPHOLDING THE ORDER LEVYING PENALTY OF RS.98,79,990 U/S. 271(1)(C) ON THE GROUND THAT THE APPELLANT WAS GUILTY OF CONCEALMENT OF INCOME INASMUCH AS IT HAD FAILED TO SHOW IN ITS RETURN THE TOTAL INCOME PURSUANCE TO SECTION 115JB AND INSTEAD , MERELY RETURNED TOTAL INCOME AS PER THE NORMAL PROVISIONS OF THE IN COME-TAX ACT, 1961. THE SAME MAY BE DELETED FOR THE REASONS STATED IN T HE SYNOPSIS ATTACHED HEREWITH. IT WAS CONTENDED BY LD. AUTHORISED REPRESENTATIVE ( AR) THAT ASSESSEE COMPANY HAS PROVIDED ALL THE NECESSARY MAT ERIAL FACTS AND INFORMATION AND THE RETURN OF INCOME ACCOMPANIED WI TH DOCUMENTS, AUDIT REPORTS WHICH INCLUDED THE INCOME EARNED BY A SSESSEE BY WAY OF LONG TERM CAPITAL GAIN. ASSESSEE DID NOT COMMIT ANY DEFAULT AS CONTEMPLATED U/S 271(1)(C) OF THE ACT AS NEITHER AN Y INCOME WAS CONCEALED NOR ANY INACCURATE PARTICULARS OF INCOME WERE FILED. IT WAS POINTED OUT BEFORE LD. ASSESSING OFFICER THAT THE P ROVISIONS OF SECTION 115JB OF THE ACT APPLY IN A CASE WHERE INCOME TAX P AYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE INCOME-TAX ACT I S LESS THAN 10% OF ITS BOOK PROFIT AS TAX PAYABLE ON THE TOTAL INCO ME AND, THEREFORE, ASSESSEE DID NOT CONSIDER IT NECESSARY TO FURNISH C OMPUTATION OF BOOK PROFIT. IT WAS FURTHER POINTED OUT THAT ASSESSEE PR OCEEDED ON A BONA FIDE AND HONEST BELIEF. FURTHER PROVISIONS OF SECTI ON 115JB OF THE ACT WERE AMENDED W.E.F. 1.4.2007 WHICH WERE COMPLETELY APPLICABLE FROM ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 5 ASST. YEAR 2007-08. AS PER THE AMENDED PROVISIONS EXEMPT INCOME U/S 10(38) OF THE ACT FROM SALE OF SALE OF EQUITY S HARES IS REQUIRED TO BE ADDED TO THE BOOK PROFIT. IT IS TRUE THAT WHILE FILING THE RETURN OF INCOME ASSESSEE COMPANY INADVERTENTLY LOST SIGHT OF THE AMENDED PROVISIONS AND THEREFORE WHILE COMPUTING THE LONG T ERM CAPITAL GAIN EXEMPT INCOME U/S 10(38) OF THE ACT WAS NOT CONSIDE RED WHICH RESULTED INTO BONA FIDE ERROR. HOWEVER, THERE IS NO CONCEALMENT OF INCOME AND/OR FURNISHING OF INACCURATE PARTICULARS OF INCOME AT ANY STAGE. LD. AR FURTHER REFERRED AND RELIED ON THE JU DGMENT OF HON. DELHI HIGH COURT IN THE CASE OF CIT VS. NG TECHNOLO GIES LTD. (2015) 57 TAXMANN.COM 389 (DELHI) AND THE JUDGMENT OF HO. PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. STOCK HOM E INDIA LTD. (2015) 58 TAXMANN.COM 197 (PUNJAB & HARYANA) WHEREI N SIMILAR FACTS WERE ADJUDICATED BY THE HON. COURTS AND JUST FOR THE SAKE OF NOT FILING REVISED RETURN AND ALSO FOR NOT COMPLYING TO THE AMENDED PROVISIONS INSERTED FROM ASST. YEAR 2007-08 ASSESSE E WAS NOT HELD TO BE IN DEFAULT AND HELD BONA FIDE AND PENALTY WAS NOT TO BE LEVIED U/S 271(1)(C) OF THE ACT. LD. AR ALSO REFERRED TO T HE CBDT CIRCULAR NO.25/2015 [F.NO.279/MISC/140/2015/ITJ] WHICH SAYS THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROVISI ON IS LESS THAN THE TAX PAYABLE UNDER THE DEEMING PROVISIONS OF SEC TION 115JB OF THE ACT THEN PENALTY U/S 271(1)(C) OF THE ACT CANNOT BE IMPOSED. 8. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE (DR) VEHEMENTLY ARGUED AND SUPPORTED THE ORDERS OF LOWER AUTHORITIES. ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 6 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED BEFORE US AND GONE THROUGH THE DECISION(S) R ELIED ON BY THE LD. AR. IN THIS GROUND ASSESSEE HAS CHALLENGED LD. CIT( A)S ORDER CONFIRMING PENALTY OF RS.98,79,990/- U/S 271(1)(C) OF THE ACT BY TREATING ASSESSEE AS GUILTY OF CONCEALMENT OF PARTI CULARS OF INCOME AS IT FAILED TO SHOW CALCULATION OF INCOME U/S 115JB O F THE ACT AND PAY MAT. 9.1 FROM GOING THROUGH THE RECORDS AND PAPER BOOK W E FIND THAT ASSESSEE IS A LIMITED COMPANY INCORPORATED ON 17.01 .1986 AND REGULARLY ASSESSED TO TAX. DURING THE YEAR UNDER AP PEAL ASSESSEE EARNED LONG TERM CAPITAL GAIN OF RS.8.53 CRORES (AP PROX.) AND EXEMPTION U/S 10(38) OF THE ACT WAS CLAIMED. AS PER THE PROVISIONS OF SECTION 115JB OF THE ACT THIS SUM OF RS.8.53 CRORES IS REQUIRED TO FORM PART OF THE BOOK PROFITS FOR THE PURPOSE OF CA LCULATING MINIMUM ALTERNATE TAX (MAT). HOWEVER, ASSESSEE HAS CLAIMED EXEMPTION U/S 10(38) OF THE ACT BUT DID NOT FILE ANY DETAIL OF CA LCULATING DEEMED INCOME U/S 115JB OF THE ACT. MORE SO ASSESSEE ALSO DID NOT ADHER TO THE STATUTORY REQUIREMENTS OF FILING OF FORM 29B DU LY CERTIFIED BY CHARTERED ACCOUNTANT, REQUIRED FOR CALCULATING BOOK PROFIT U/S 115JB OF THE ACT AND MAT SO AS TO PAY THE HIGHER OF NORMA L TAX OR MAT. 9.2 WE FURTHER OBSERVE THAT LD. COUNSEL HAS HEAVILY RELIED ON THE JUDGMENT OF HON.PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. STOCK HOME INDIA LTD. WHEREIN HONBLE COURT HAS OBS ERVEDAS FOLLOWS:- ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 7 5. AFTER HEARING LEARNED COUNSEL FOR THE PARTIES, W E FIND CONSIDERABLE FORCE IN THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE RES PONDENT. THE TRIBUNAL WHILE DELETING THE PENALTY HAD NOTICED AS UNDER:- '4. HAVING GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW WE FIND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT THE ASSESSEE WAS LIABLE UNDER THE PROVISIONS OF SECTION 115JB AND TH AT THE ASSESSEE HAS NOT FILED FORM NO. 29B WHICH IS REQUIRED TO BE FILED U/S 115J B(4) OF THE ACT. THE ASSESSEE HAD CLAIMED LONG TERM CAPITAL GAINS ON THE SALE OF SECURITIES/SHARES AS EXEMPT U/S 10(38). THE PROFIT ON LONG TERM CAPITAL GAIN IS TO BE ADDED WHILE COMPUTING THE BOOK PROFIT AND TAX LIABILITY U/S 115JB. THE A.O. I SSUED SHOW CAUSE NOTICE IN THIS REGARD TO THE ASSESSEE. THE ASSESSEE THEREAFTER REV ISED THE COMPUTATION OF INCOME. THE AO INITIATED PENALTY PROCEEDINGS U/S 27 1(L)(C) OF THE ACT AND LEVIED PENALTY OF RS. 13.58.452/- WITH THIS FINDING THAT T HE ASSESSEE HAD FILED REVISED COMPUTATION OF INCOME ONLY AFTER DETECTION OF CONCE ALMENT OF FACTS. THE L.D. CIT(A) HAS DELETED THE PENALTY ACCEPTING THE CONTEN TION OF THE ASSESSEE THAT IT HAD NEITHER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME AND RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE EASE OF CIT V. RELIANCE PETRO PRODUCTS LTD. 230 CTR 320 (SC) AND OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. S SP PVT. LTD. [1959] 35 ITR 349 (P& H). THE EXPLANATION OF THE ASSESSEE BEFORE THE LD. CIT (A) REMAINED THAT PROVISO TO SECTION 10 (38) OF THE ACT WAS INSERTED W.E.F 01.04.2007 AND PRIOR TO THAT LONG TERM CAPITAL GAIN ON SHARES WAS NOT TO BE CONSIDERED FOR APPLICABILITY OF MAT PROVISIONS. WHEN THIS AMENDMENT CAME TO THE KNO WLEDGE OF THE ASSESSEE. IT IMMEDIATELY OBTAINED THE AUDITORS REPORT IN THE FORM NO. 29B AND FILED THE SAME ALONG WITH REVISED COMPUTATION OF INCOME. IT W AS ACCORDINGLY ARGUED THAT ASSESSEE HAD NEITHER CONCEALED THE PARTICULARS OF I NCOME NOR FURNISHED INACCURATE PARTICULARS OF INCOME SO AS TO ATTRACT T HE PROVISIONS OF SECTION 271(1) (C) OF THE ACT. WE DO NOT HAVE ANY REASON TO DOUBT BONA FIDE OF THE ASSESSEE IN THE ABOVE EXPLANATION. IT IS ALSO AN UNDISPUTED FAC T THAT THE ASSESSEE HAD FURNISHED DETAILS OF INCOME AND EXPENDITURE IN ITS RETURN WHICH DETAILS IN THEMSELVES WERE NOT FOUND TO BE INACCURATE. THUS, L D. CIT(A) HAS RIGHTLY HELD THAT IT CANNOT BE SAID THAT ASSESSEE HAD CONCEALED PARTI CULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS THEREOF IN THE CASE OF CIT V . RELIANCE PETRO PRODUCTS (P) LID. (SUPRA] FOLLOWED BY THE LD. CIT(A) IT HAS BEEN HELD THAT FURNISHING OF INACCURATE PARTICULARS MEAN DETAILS SPECIFIED IN RE TURN WHICH ARE NOT EXACT OR CORRECT, NOT ACCORDING TO TRUTH OR ERRONEOUS AND IF THE ASSESSEE FURNISHES DETAILS OF INCOME AND EXPENDITURE IN ITS RETURN WHICH DETAI LS IN THEMSELVES ARE NOT FOUND TO BE INACCURATE WHICH CANNOT BE SAID THAT ASSESSEE HAS CONCEALED PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTICULARS MERELY B ECAUSE IN RELATION TO THOSE PARTICULARS AS CLAIM FOR DEDUCTION IS MADE WHICH IS NOT ACCEPTED. WE THUS DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER ON THE ISSUE. THE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED.' 6. IT WAS NOT DISPUTED THAT VIDE FINANCE ACT, 2006 PROVISO WAS INSERTED IN SECTION 10(38) OF THE ACT W.E.F. 1.4.2007 AND PRIOR TO THE INSERTION OF THE AFORESAID PROVISO ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 8 UNDER SECTION 10(38) OF THE ACT. THE LONG TIME CAPI TAL GAINS ON SHARES WAS NOT REQUIRED TO BE INCLUDED WHILE DETERMINING THE BOOK PROFITS UNDER SECTION 115.IR OF THE ACT. THE SAID PROVISO READS THUS: 'PROVIDED THAT THE INCOME BY WAY OF LONG-TERM CAPIT AL GAIN OF A COMPANY SHALL BE TAKEN INTO ACCOUNT IN COMPUTING THE BOOK PROFIT AND INCOME-TAX PAYABLE UNDER SECTION 115.IB.' 7. ACCORDING TO IT. THE LONG TERM CAPITAL GAINS ON SHARES IS TO BE INCLUDED WHILE DETERMINING THE BOOK PROFITS. IT WAS FOR THE FIRST TIME THAT FOR THE ASSESSMENT YEAR 2007-08 ONWARDS, THE AFORESAID PROVISION BECAME APP LICABLE. THE PLEA OF THE ASSESSEE REGARDING THE BONA FIDES HAS BEEN ACCEPTED BY THE TRIBUNAL, '['HERE IS NOTHING TO DOUBT THE VERACITY OF THE AFORESAID FIND INGS RECORDED BY THE TRIBUNAL. 8. IN VIEW OF THE ABOVE, NO QUESTION OF LAW MUCH LE >S A SUBSTANTIAL QUESTION OF LAW ARISES IN THIS APPEAL FOR CONSIDERATION OF THIS COURT. ACCORDINGLY, FINDING NO MERIT IN THE APPEAL, THE SAME IS HEREBY DISMISSED. 10. WE OBSERVE THAT THERE IS NO DISPUTE THAT ASSESS EE COMMITTED AN ERROR BY NOT DISCLOSING CORRECT BOOK PROFIT U/S 115JB OF THE ACT. FURTHER THERE IS ALSO NO DISPUTE WITH REGARD TO THE FACT THAT ASSESSEE HAS NOT FURNISHED FORM NO.29B REFERRED UNDER RULE 4 0B OF THE IT RULES WHICH DEALT WITH SPECIAL PROVISIONS OF TAX OF CERTAIN COMPANIES AND REQUIRES THAT A REPORT OF AN ACCOUNTANT TO BE F URNISHED ALONG WITH THE RETURN OF INCOME UNDER SUB-SEC.(4) OF SECTION 1 15JB OF THE ACT AND THE SAME WAS NEITHER ATTACHED WITH THE RETURN O F INCOME NOR WAS IT FURNISHED DURING THE COURSE OF ASSESSMENT PROCEE DINGS. IT IS PERTINENT TO NOTE THAT ASSESSEE WAS HAVING SUFFICIE NT OPPORTUNITY TO FILE REVISED RETURN OF INCOME AND ALSO TO FILE NECE SSARY REPORT U/S 115JB OF THE ACT IN FORM NO.29B ALONG WITH ANNEXURE -A HAVING DETAILS RELATING TO COMPUTATION OF BOOK PROFIT BUT NO ACTIO N FOR DOING THE NEEDFUL WAS TAKEN BY ASSESSEE. IT IS TRUE THAT THE FACTS DEALT BY HON. PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. STOCK HOME INDIA LTD. (SUPRA) ARE QUITE SIMILAR TO THE FACTS O F ASSESSEE WITH THE ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 9 ONLY VARIATION THAT IN THE CASE ADJUDICATED BY HON. PUNJAB & HARYANA HIGH COURT ASSESSEE DID NOT FILE FORM NO.29B ALONG WITH RETURN OF INCOME BUT FURNISHED THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALSO FILED THE REVISED RETURN OF IN COME PAYING DUE TAXES. WHEREAS IN THE CASE OF ASSESSEE NEITHER RETU RN WAS REVISED ALONG WITH PAYING DUE TAXES AS PER MAT NOR FORM NO. 29B AS REQUIRED UNDER IT RULES WAS FILED DURING THE COURSE OF ASSES SMENT PROCEEDINGS. FOR THIS VERY REASON THE FACTS OF THE CASE OF ASSESSEE ARE DIFFERENT TO THOSE OF THE JUDGMENT RELIED ON BY THE ASSESSEE IN THE CASE OF CIT VS. STOCK HOME INDIA LTD. (SUPRA). 11. IT IS TRUE THAT DETAILS OF LONG TERM CAPITAL GA IN WERE FORMING PART OF THE AUDITED FINANCIAL STATEMENTS BUT ONE HAS TO TAKE COGNIZANCE OF THE FACT THAT THESE DETAILS CALLS FOR VERIFICATION ONLY WHEN THE CASE IS SELECTED FOR SCRUTINY ASSESSMENT AND THE NECESSARY DETAILS ARE EXAMINED BY THE ASSESSING OFFICER. CERTAINLY IF THE CASE OF ASSESSEE HAS NOT BEEN SCRUTINIZED THEN THIS ERROR COMMITTED BY THE ASSESSEE COULD NOT HAVE BEEN EXAMINED AND THERE WOULD CERTAI NLY HAVE BEEN LOSS OF REVENUE TO THAT EFFECT. WE ARE SURPRISED TO OBSERVE THAT ON ONE HAND ASSESSEE IS ACCEPTING THE ERROR COMMITTED BY IT AND ON THE OTHER HAND IT HAS NOT TAKEN ANY PAIN TO REVISE THE RETURN AND TO COMPLY WITH THE STATUTORY REQUIREMENTS OF FILING FO RM 29B R.W.S. 115JB OF THE ACT WHICH CLEARLY RAISES DOUBT ABOUT ITS BON A FIDENESS. 12. WE FURTHER OBSERVE THAT IN THE PENALTY ORDER U/ S 271(1)(C) OF THE ACT LD. ASSESSING OFFICER HAS OBSERVED THAT ASSESSE E IN ITS RETURN FILED FOR ASST. YEAR 2005-06 AND 2006-07 HAS GIVEN WORKING OF TAX ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 10 PAYMENT U/S 115JB EVEN WHEN THE NORMAL TAX WAS HIGH ER THAN THE DEEMED INCOME U/S 115JB OF THE ACT . IT RAISES DOUB T IN OUR MIND THAT WHEN ASSESSEE WAS CONSISTENTLY SUBMITTING DETAILS O F CALCULATION OF DEEMED INCOME US 115JB OF THE ACT THEN WHAT STOPPED IT FOR NOT CALCULATING THE SAME FOR ASST. YEAR 2007-08 WHEN TH E MAT WAS HIGHER THAN THE NORMAL TAX. IT GIVES A SOUND BASIS TO INFER THAT THERE WAS A LACK OF BONA FIDENESS AND MENS REA OF CONCEAL MENT OF PARTICULARS OF INCOME BECAUSE ASSESSEE HAD EARNED A HANDSOME INCOME ON LONG TERM CAPITAL GAIN FROM SALE OF INVES TMENT AT RS.8.53 CRORES (APPROX.) AND THE LIABILITY UNDER MAT WAS MU CH HIGHER THAN NORMAL TAX. IF THE CASE OF ASSESSEE HAD NOT COME UN DER SCRUTINY THIS YEAR IT MIGHT HAVE PASSED FREE OUT OF THE CLUTCHES OF THE REVENUE AUTHORITIES WITHOUT PAYING THE CORRECT TAX UNDER MA T. FURTHER EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN AS SESSEE HAD FAIR CHANCES TO CORRECT ITS MISTAKE BY FILING FORM 29B AND PAYING THE NECESSARY TAXES, THE SAME WAS NOT DONE ON ITS PART. ASSESSEE HAS RELIED ON VARIOUS DECISIONS BUT THE SAME WILL NOT B E OF ANY HELP TO ASSESSEE AS THE FACTS ARE DIFFERENT AND MOST IMPORT ANTLY THE FACT OF NOT FILING A REVISED RETURN ALONG WITH FORM NO.29B AND PAYING OF TAXES BEFORE FINALIZATION OF ASSESSMENT U/S 143(3) OF THE ACT. WE FURTHER OBSERVE THAT LD. ASSESSING OFFICER HAS GIVEN PROPER REASONING BEFORE CONCLUDING TO IMPOSE PENALTY U/S 271(1)(C) OF THE A CT BY OBSERVING AS FOLLOWS :- (I) THE ASSESSEE HAS NOT OFFERED MAT INCOME IN ITS STATEMENT OF INCOME. (II) THE ASSESSEE HAS NOT PAID TAX ON MAT INCO ME. ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 11 (III) THE ASSESSEE HAS NOT GIVEN COMPARATIVE FIG URES OF TAX PAYMENT ON REGULAR INCOME OR MAT INCOME THOUGH THE SAME WAS RE QUIRED BY THE PROVISIONS OF LAW. (IV) THE ASSESSEE HAS NOT FILED FORM NO 29B THOUGH IT SUPPOSED TO FILE. (V) THE ASSESSEE HAS NOT SHOWN LTCG AS EXEMPTION IN LAST ASSESSMENT YEAR I.E. IN A Y 2006-07, HENCE IT MUST HAVE REFERR ED THE SECTION BEFORE CLAIMING THE EXEMPTION, (VI) THE AMOUNT OF CONCEALED INCOME IS MORE THAN 9 CRORE I.E. SUBSTANTIVE. (VII) XXXXXXX (VIII) THE ASSESSEE HAS NOT FURNISHED WORKING OF IN COME U/S. 115JB ONLY IN THE YEAR UNDER CONSIDERATION THOUGH IT WAS DONE IN EVERY YEAR ON REGULAR BASIS. THE NON-MENTIONING OF WORKING OF MAT INCOME THOUGH LESS THAN REGULAR INCOME SHOWS THAT THE ASSESSEE WA S WANTED TO HIDE ITS MAT INCOME. THIS PARTICULAR ATTITUDE OF ASSESSE E IS ENOUGH TO PROVE THAT THE ASSESSEE HAS NOT COMMITTED ANY MISTAKE BUT MEANINGFULLY AVOIDED SHOWING INCOME U/S. 115JB OF THE IT ACT. 13. WE FURTHER OBSERVE THAT LD. CIT(A) HAS ALSO CON FIRMED THE PENALTY BY OBSERVING THAT THE APPELLANT COMPANY HAD FURNISHED INACCURATE PARTICULARS OF ITS INCOME BY MAKING INCO RRECT CLAIM/EXEMPTION AND IT UNDERSTATED ITS INCOME AND C ONCEALED THE PARTICULARS OF INCOME BY NOT PAYING MAT ON THE DEEM ED INCOME I.E. BOOK PROFIT U/S 115JB OF THE ACT. 14. WE ARE, THEREFORE, OF THE VIEW THAT IN TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, OBSERVATION MADE BY THE LOWER AUTHORITIES AND DISCUSSIONS MADE BY US IN THE PRECEDING PARAGRA PHS, THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME BY ALL EGEDLY NOT CALCULATING MAT U/S 115JB WHICH IN THE CASE OF ASSE SSEE WAS HIGHER THAN THE NORMAL TAXES; AS THE LONG TERM CAPITAL GAI N EXEMPTED U/S 10(38) OF THE ACT IS REQUIRED TO BE ADDED IN THE BO OK PROFITS FOR THE PURPOSE OF CALCULATING MAT. ASSESSEE IS ALSO GUILTY FOR THE FACT THAT IT WAS WELL AWARE OF THE PROVISIONS OF SECTION 115JB O F THE ACT AS IT HAS BEEN CONSISTENTLY FURNISHING DETAILS OF THE SAME IN THE PREVIOUS ASSTT. ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 12 YEARS WHEREIN NORMAL TAX WAS HIGHER THAN THE MAT BU T IN THE YEAR UNDER APPEAL WHEREIN TAX U/S 115JB OF THE ACT WAS R S.1,10,85,350/- AS AGAINST NORMAL TAX OF RS.25,63,322/-, ASSESSEE HAD NOT FURNISHED ANY DETAIL OF MAT CALCULATION AND ALSO HAD NOT FILE D FORM 29B STATUTORILY REQUIRED UNDER THE ACT TO BE FURNISHED ALONG WITH THE RETURN OF INCOME. WE, THEREFORE, UPHOLD THE ORDER OF LD. C IT(A) CONFIRMING THE PENALTY OF RS.98,79,990/- U/S 271(1)(C) OF THE ACT CALCULATED ON THE TAX TO BE EVADED OF RS.98,79,990/- CALCULATED @ 100% OF DEEMED INCOME U/S 115JB OF RS.98,79,990/-. ACCORDIN GLY, THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 15. GROUND NO.3 READS AS UNDER :- 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES O F THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE L EVY OF PENALTY OF RS.4,63,247 U/S. 271(1)(C) IN RESPECT OF DISALLOWAN CE OF EXPENSES MADE IN THE COMPUTATION OF THE APPELLANT'S TOTAL IN COME AS PER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT, 1961 IN TO TAL DISREGARD OF THE FACT THAT THE APPELLANT'S TOTAL INCOME FOR THE PRESENT ASSESSMENT YEAR HAVING BEEN DEEMED TO BE EQUAL TO THE BOOK PRO FIT PURSUANT TO THE PROVISIONS OF SECTION 115JB, THE IMPUGNED DISAL LOWANCE OF EXPENDITURE HAD NO BEARING IN ARRIVING AT THE APPEL LANT'S TAX LIABILITY AND IN TURN, IN ARRIVING AT THE AMOUNT OF TAX ALLEG ED TO HAVE BEEN EVADED AS ENVISAGED BY CLAUSE (III) OF SECTION 271( 1) WHICH FORMED THE VERY BASIS FOR ARRIVING AT THE QUANTUM OF THE PENALTY. THE SAME MAY BE DELETED FOR THE REASONS STATED IN THE SYNOPS IS ATTACHED HEREWITH. 16. BRIEF FACTS RELATED TO THIS GROUND ARE THAT DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER OBSERV ED THAT ASSESSEE HAS CLAIMED VARIOUS EXPENSES OF RS.13,24,5 63/- AGAINST GROSS REVENUE WHICH INCLUDED DIVIDEND, LONG TERM CA PITAL GAIN, INCOME FROM HOUSE PROPERTY. IT WAS ALSO OBSERVED TH AT ASSESSEE WAS ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 13 NOT CARRYING ANY REGULAR BUSINESS ACTIVITIES AND EV EN UNDER THE HEAD BUSINESS ACTIVITIES IT WAS MENTIONED DURING THE YEAR, WE HAVE EARNED RENT INCOME AND DIVIDEND INCOME. WE HAVE ALS O EARNED INCOME BY SELLING SHARES. THE LD. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS CLAIMED DEPRECIATION WITHOUT FURNISHIN G ANY EVIDENCE AS TO FOR WHICH BUSINESS IT HAS UTILIZED THE BUSINE SS ASSETS. ACCORDINGLY THE CLAIM OF RS.13,24,563/- WAS DISALLO WED. NO APPEAL ON QUANTUM ADDITION WAS FILED BY ASSESSEE. PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT WERE INITIATED AND BY WAY OF P ENALTY ORDER DATED 20.5.2010, IMPOSED PENALTY AT RS.463,247/- WHICH WA S FURTHER CONFIRMED BY LD. CIT(A). 17. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. LD. AR REFERRING TO THE AUDITED FINANCIAL STATEMENTS AN D PROFIT AND LOSS ACCOUNT AS WELL AS COMPUTATION OF INCOME SUBMITTED THAT LD. ASSESSING OFFICER ERRED IN OBSERVING THAT ASSESSEE HAD NO INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS BY C OMPLETELY IGNORING THE FACT THAT ASSESSEE HAS SHOWN POSITIVE INCOME OF RS.2,06,595/- AS BUSINESS INCOME. FURTHER EXPENSES CLAIMED BY ASSESS EE ARE OF GENERAL ADMINISTRATIVE NATURE INCURRED IN MEETING O UT DAY TO DAY EXPENSES AND TO RUN THE OFFICE OF THE COMPANY. IT I S NEEDLESS TO MENTION THAT ASSESSEE IS A LIMITED COMPANY BEING IN CORPORATED FOR RUNNING BUSINESS AND DURING THE YEAR APART FROM SHA RE, DIVIDEND, RENT INCOME AND INTEREST INCOME ASSESSEE HAD OTHER INCOM E ALSO. FURTHER THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE EX PENDITURE INCURRED BY THE ASSESSEE. AS THERE IS NO CONCEALMENT OF PART ICULARS OF INCOME ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 14 NO PENALTY U/S 271(1)(C) OF THE ACT SHOULD HAVE BEE N IMPOSED BY THE ASSESSING OFFICER. 18. LD. DR VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF LOWER AUTHORITIES. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THROUGH THIS GROUND NO.3 ASSESSEE IS AGGRIEVED WITH THE ORDER OF LD. CIT(A) UPHOLDING LEVY OF PENA LTY OF RS.4,63,247/- U/S 271(1)(C) OF THE ACT IN RESPECT OF DISALLOWANCE OF EXPENDITURE MADE IN THE COMPUTATION OF ASSESSEES TOTAL INCOME. WE OBSERVE THAT ASSESSEE IS INCORPORATED SINCE 1986 AND IS REGULARL Y FILING RETURN OF INCOME. DURING THE YEAR UNDER CONSIDERATION ASSESSE ES MAIN SOURCE REVENUE WAS FROM INTEREST INCOME, RENT INCOME, DIVI DEND INCOME AND AMOUNT RECEIVED FROM KEYMAN INSURANCE POLICY. ASSES SEE HAS ALSO INCURRED VARIOUS DAY TO DAY EXPENSES INCLUDING SALA RY, WAGES, CONTRIBUTION TO ESI, PF, AUDIT FEES, ELECTRICITY EX PENSES, OFFICE MAINTENANCE ETC. ASSESSEE HAS SHOWN DEPRECIATION OF RS.29,36,189/- WHICH HAS BEEN ADDED BACK TO THE PRO FIT IN THE COMPUTATION OF INCOME AND DEPRECIATION OF A SUM OF RS.2,91,780/- WHICH HAS BEEN CALCULATED ON THE OFFICE BUILDING, O FFICE EQUIPMENT, FURNITURE ETC. USED IN THE NORMAL RUNNING OF BUSINE SS. APART FROM THAT ASSESSEE HAS DISALLOWED DEMAT CHARGES AND SECURITY TRANSACTION TAX. THE LD. ASSESSING OFFICER DISALLOWED A SUM OF RS.13 ,24,563/- BEING EXPENDITURE CLAIMED DURING THE YEAR ON THE BASIS OF HIS OBSERVATION THAT ASSESSEE IS NOT CARRYING ON ANY BUSINESS ACTIV ITY AND HAS CONCEALED THE PARTICULARS OF INCOME BY CLAIMING THE IMPUGNED ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 15 EXPENDITURE OF RS.13,24,563/- AGAINST OTHER INCOME OF THE ASSESSEE. ON THE DISALLOWED EXPENSES, PENALTY OF RS.4,63,247/ - U/S 271(1)(C) OF THE ACT HAS BEEN IMPOSED. WE OBSERVE THAT IT IS NOT DISPUTED BY THE REVENUE ABOUT THE GENUINENESS OF THE EXPENSES OF RS .13,24,563/- AS THEY ARE DULY SUPPORTED BY EVIDENCES AND CERTIFI ED BY THE AUDITORS. IT IS ALSO INCORRECT ON THE PART OF ASSESSING OFFIC ER TO OBSERVE THAT ASSESSEE HAS NOT SHOWN ANY BUSINESS INCOME BECAUSE IN THE COMPUTATION OF INCOME AT PAGE 73 OF PAPER BOOK ASSE SSEE HAS SHOWN A POSITIVE BUSINESS INCOME OF RS.2,06,595/-. AS FAR AS PENALTY U/S 271(1)(C) OF THE ACT IS CONCERNED THE SAME CAN BE IMPOSED ONLY IF THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS O F INCOME OR CONCEALED PARTICULARS OF INCOME; WHEREAS ASSESSEE H AS FURNISHED ALL PARTICULARS OF INCOME IN THE COMPUTATION AS WELL AS AUDITED BALANCE SHEET AND HAS MADE CLAIM DEEMING IT TO BE BONA FIDE WHICH ARE RELATING TO OF GENERAL EXPENSE USUALLY INCURRED BY THE COMPANY FOR RUNNING DAY TO DAY ACTIVITIES. THE IMPUGNED EXPENSE S HAVE ALREADY BEEN DISALLOWED AND ASSESSEE HAS AGREED TO PAY TAXE S THEREON BUT CERTAINLY ASSESSEE SHOULD NOT BE VISITED BY PENALTY U/S 271(1)(C) OF THE ACT. WE FURTHER OBSERVE THAT PENALTY IS NOT IMP OSABLE ON THIS IMPUGNED DISALLOWANCE OF EXPENSES BECAUSE FOR THE Y EAR UNDER APPEAL ASSESSEES TAX LIABILITY UNDER MAT IS HIGHER THAN THE NORMAL TAX LIABILITY AND EVEN THE DISALLOWANCE OF EXPENSES WILL NOT AFFECT THE OVERALL TAX LIABILITY AND IN SUCH SITUATION PENALTY IS NOT LEVIABLE U/S 271(1)(C) OF THE ACT ON THE DISALLOWED EXPENSES. WE , THEREFORE, DELETE THE PENALTY OF RS.4,32,647/- U/S 271(1)(C) O F THE ACT AND ALLOW THIS GROUND OF THE ASSESSEE. ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 16 20. GROUND NOS.4 & 5 ARE OF GENERAL NATURE WHICH NE ED NO ADJUDICATION. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH FEBRUARY,2017 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 09/2/2017 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NO. 1275/AHD/2012 ASST. YEAR 2007-08 17 1. DATE OF DICTATION: 8/2/2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 9/2/2017 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 10/02/17 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: