ACIT, Nashik V. M/s COPPER SEMIS [P] LTD, Nashik

ITA 1540/PUN/2013

• Counselvise Citation: 154024514 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Depreciation; Deemed to accrue or arise in india; Wrong claim; Unabsorbed depreciation
• Section: 115JB; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1540/PN/2013 (ASSESSMENT YEAR : 2005-06) ACIT, CIRCLE-1, NASHIK .. APPELLANT VS. M/S. COPPER SEMIS (P) LTD., 93/5-MIDC AREA, SATPUR, NASHIK - 422007 .. RESPONDENT PAN NO.AAACC9204D ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : SHRI MUKESH JHA DATE OF HEARING : 17-03-2015 DATE OF PRONOUNCEMENT : 25-03-2015 ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 01-05-2013 OF THE CIT(A)-I, NASHIK RELA TING TO ASSESSMENT YEAR 2005-06. DELETION OF PENALTY OF RS .16,47,900/- LEVIED BY THE AO U/S.271(1)(C) OF THE I.T. ACT IS T HE ONLY ISSUE RAISED BY THE REVENUE IN THE GROUNDS OF APPEAL. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADE OF NON-FERROUS WIRES, SEMIS, ETC. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME DECLARING NIL INCOME AFTER CLAIMING SET OFF OF BROU GHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT OUT OF 7,4 1,200 NO. OF SHARES, 5,89,910 SHARES WERE TRANSFERRED TO NEW SHA REHOLDERS ON 2 10-09-2003 WHICH IS EVIDENT FROM THE ANNUAL RETURN SENT TO ROC FOR THE PERIOD 30-09-2002 TO 29-09-2003. BASED ON THIS THE AO PREPARED A CHART OF SHARE HOLDING AS ON 31-03-2003 ACCORDING TO WHICH SHARES OF THE ASSESSEE COMPANY CARRYING MORE THAN 51% OF THE VOTING POWER WERE BENEFICIALLY HELD BY THE NEW SHAREHOLDERS. THE AO THEREFORE ASKED THE ASSESSEE TO EXPLAIN AS T O WHY THE PROVISIONS OF SECTION 79 SHOULD NOT BE ATTRACTED AN D WHY THE CLAIM OF SET OFF OF BROUGHT FORWARD BUSINESS LOSS PERTAIN ING TO ASSESSMENT YEAR 2003-04 AND EARLIER YEARS SHOULD NO T BE REJECTED. 3. IT WAS EXPLAINED BY THE ASSESSEE THAT SINCE SHAR EHOLDING PATTERN HAS NOT CHANGED DURING THE LAST TWO YEARS E XCEPT FRESH ISSUE OF SHARES MADE DURING FINANCIAL YEAR 2003-04, THEREFORE, PROVISIONS OF SECTION 79 OF THE I.T. ACT ARE NOT AP PLICABLE. THE ASSESSEE ALSO RELIED ON CERTAIN DECISIONS. 4. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE. AS REGARDS THE VARIOUS DECI SIONS CITED BEFORE HIM, HE OBSERVED THAT THEY CANNOT BE APPLIED TO THE PRESENT CASE BECAUSE THOSE DECISIONS WERE MAINLY DUE TO THE PROVISIONS IN CLAUSE (B) OF SECTION 79 WHICH HAS SINCE BEEN OMITT ED BY THE FINANCE ACT, 1988 W.E.F. 01-04-1989. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE THE AO HELD THAT BUSINESS LOS S PERTAINING TO ASSESSMENT YEAR 2003-04 AND EARLIER YEARS CANNOT BE ALLOWED TO BE CARRIED FORWARD AND SET OFF. THE AO HOWEVER ALLOWE D UNABSORBED DEPRECIATION TO BE SET OFF AND CARRIED FORWARD. 3 5. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) B UT WITHOUT ANY SUCCESS. ON FURTHER APPEAL, THE TRIBUNAL VIDE ORDER DATED 08- 06-2012 DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE ISSUE OF DENIAL OF CARRIED FORWARD LOSS RELATING TO A.Y. 200 3-04 AND EARLIER YEARS. THE AO THEREAFTER INITIATED PENALTY PROCEED INGS ON THE GROUND THAT ASSESSEE HAD FILED INACCURATE PARTICULA RS OF INCOME AND THEREBY CONCEALED THE INCOME. 6. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) CHALLENGING THE LEVY OF PENALTY U/S. 271(1)(C) OF T HE I.T. ACT. IN APPEAL THE LD.CIT(A) DELETED THE PENALTY LEVIED BY THE AO U/S. 271(1)(C) OF THE I.T. ACT. WHILE DOING SO, HE OBSE RVED THAT THE ASSESSEE HAS DISCLOSED FULL FACTS REGARDING THE CLA IM OF SET OFF OF UNABSORBED LOSSES. THE AO DID NOT ALLOW THE SET OF F OF BROUGHT FORWARD BUSINESS LOSS OF RS.45,03,380/- AS THERE WA S A CHANGE OF 51% SHARE HOLDING OF THE COMPANY. ACCORDING TO THE LD.CIT(A), MERE MAKING OF CLAIM OF EXPENDITURE OR DEDUCTION WH ICH IS NOT ALLOWABLE BY ITSELF WILL NOT AMOUNT TO FURNISHING O F INACCURATE PARTICULARS OF INCOME. FOR THE ABOVE PROPOSITION, HE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. REPORTED IN 322 IT R 158, THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. MANILAL BROTHER REPORTED IN 294 ITR 501 AND THE DEC ISION OF THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CIT VS. SHAHABAD CO-OPERATIVE SUGAR MILLS LTD. REPORTED IN 322 ITR 73 AND VARIOUS OTHER DECISIONS. HE FURTHER HELD THAT ALTHOUGH THE DISALLOWANCE ON WHICH THE PENALTY WAS LEVIED HAS BE EN CONFIRMED 4 BY THE ITAT IN THE QUANTUM APPEAL AND THE MATTER HA S REACHED FINALITY, HOWEVER, IT IS THE SETTLED POSITION OF LA W THAT THE ASSESSMENT AND PENALTY PROCEEDINGS ARE DIFFERENT AN D MERELY BECAUSE THE ADDITION HAS BEEN CONFIRMED IN APPEAL D OES NOT AUTOMATICALLY LEAD TO CONCEALMENT OR INACCURATE PAR TICULARS OF INCOME. HE ACCORDINGLY DELETED THE PENALTY LEVIED BY THE AO U/S.271(1)(C) OF THE I.T. ACT. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CHA LLENGED THE ORDER OF THE CIT(A) CANCELLING THE PENALTY LEVI ED BY THE AO U/S.271(1)(C) OF THE I.T. ACT. HE SUBMITTED THAT T HE ASSESSEE NEVER EXPLAINED ANYTHING IN RESPECT OF THE REASONS FOR FU RNISHING THE WRONG CLAIM OF BROUGHT FORWARD LOSS OF RS.43,03,380 /-. THE VARIOUS DECISIONS RELIED ON BY THE LD. CIT(A) ARE D ISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE . THE ASSESSEE NEVER SUBMITTED THAT IT HAD MISTAKENLY MADE A CLAIM IN THE RETURN OF INCOME. INSTEAD THE ASSESSEE ALWAYS TRIED TO SUB STANTIATE THAT THEY MADE THE CLAIM RIGHTFULLY. HE SUBMITTED THAT SINCE THE ASSESSEE IS A COMPANY AND IS ADVISED BY A NUMBER OF TECHNICALLY QUALIFIED PERSONS, THEREFORE, IT CANNOT BE SAID THA T THE ASSESSEE WAS IGNORANT OF LAW. 8.1 REFERRING TO THE DECISION OF THE HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF CIT VS. CHANCHAL KATYAL REPO RTED IN 173 TAXMANN 71 HE SUBMITTED THAT THE HONBLE HIGH COURT IN THE SAID 5 DECISION HAS HELD THAT WHERE THE ASSESSEE HAS NOT O FFERED ANY EXPLANATION, CLAUSE (A) OF EXPLANATION 1 OF SECTION 271(1)(C) IS CLEARLY ATTRACTED. HE ACCORDINGLY SUBMITTED THAT T HE ORDER OF THE CIT(A) BE SET-ASIDE AND THAT OF THE ORDER OF THE AO BE RESTORED. 9. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HA ND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED TH AT THERE IS NO DISPUTE REGARDING THE CHANGE OF SHAREHOLDING IN F.Y . 2003-04 AND THE APPLICABILITY OF PROVISIONS OF SECTION 79. THE REFORE, THE ASSESSEE IS NOT ENTITLED TO CARRY FORWARD OF LOSSES PRIOR TO A.Y. 2003-04. HE HOWEVER SUBMITTED THAT THE ASSESSEE FI LED THE RETURN OF INCOME AT NIL AFTER CLAIMING BROUGHT FORWARD LOS S OF RS.45,03,380/- AND FILED THE RETURN UNDER THE PROVI SIONS OF MAT DECLARING BOOK PROFIT OF RS.58,60,328/- U/S.115JB O F THE I.T. ACT. REFERRING TO PAGE 11 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE ASSESSMENT ORDER PASSED U/S.143(3) ON 24-12-2007 ACCORDING TO WHICH EVEN AFTER ASSESSMENT THE ASSESS EE STILL REMAINS UNDER MAT. HE SUBMITTED THAT THE ASSESSEE HAS UNAB SORBED DEPRECIATION WHICH HAS BEEN ALLOWED BY THE AO AND T HE SAME IS SUFFICIENT TO TAKE CARE OF THE ASSESSED INCOME. HE DREW THE ATTENTION OF THE BENCH TO EXPLANATION 4 OF SECTION 271(1)(C) WHICH READS AS UNDER : EXPLANATION 4 FOR THE PURPOSES OF CLAUSE (III) OF THIS SUB- SECTION, THE EXPRESSION THE AMOUNT OF TAX SOUGHT TO BE EVADED (A) IN ANY CASE WHERE THE AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED HAS THE EFFECT OF REDUCING THE LO SS DECLARED IN THE RETURN OR CONVERTING THAT LOSS INTO INCOME, MEANS THE TAX THAT WOULD HAVE BEEN CHARGEABLE ON THE INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED OR INACCURATE PARTIC ULARS HAVE BEEN FURNISHED HAD SUCH INCOME BEEN THE TOTAL INCOME; 6 (B) IN ANY CASE TO WHICH EXPLANATION 3 APPLIES, MEAN S THE TAX ON THE TOTAL INCOME ASSESSED [ AS REDUCED BY THE AMOUNT OF ADVANCE TAX, TAX DEDUCTED AT SOURCE, TAX COLLECTED A T SOURCE AND SELF-ASSESSMENT TAX PAID BEFORE THE ISSUE OF NOTICE UNDER SECTION 148]; (C) IN ANY OTHER CASE, MEANS THE DIFFERENCE BETWEEN T HE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY TH E AMOUNT OF INCOME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONC EALED OR INACCURATE PARTICULARS HAVE BEEN FURNISHED. 9.1 REFERRING TO THE ABOVE PROVISIONS OF SECTION 27 1(1)(C) OF THE I.T. ACT, HE SUBMITTED THAT PENALTY U/S.271(1)(C) I S LEVIED ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. HE SUBMITTED TH AT NONE OF THE CLAUSES OF EXPLANATION 4 ARE APPLICABLE TO THE ASSE SSEE COMPANY. REFERRING TO THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. REPORTE D IN 327 ITR 543 HE SUBMITTED THAT THE HONBLE HIGH COURT AFTER CONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF CIT VS. GOLD COIN HEALTH FOOD LTD. REPORTED IN 304 ITR 308 HELD THAT WHERE THE TOTAL INCOME COMPUTED UNDER REGULAR PROVI SIONS IS LESS THAN THE BOOK PROFITS AND THE ASSESSMENT HAS BEEN M ADE U/S.115JB THEN IN THAT CASE PENALTY CANNOT BE LEVIED U/S.271( 1)(C) OF THE I.T. ACT. HE SUBMITTED THAT THE HONBLE SUPREME COURT H AS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE DECISION O F HIGH COURT AS REPORTED IN 21 TAXMANN.COM 184. HE ACCORDINGLY SUB MITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS R AISED BY THE REVENUE BE DISMISSED. 10. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) 7 AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE PENALTY HAS BEEN LEVIED U/S.271(1)(C) OF THE I.T. A CT IN THE INSTANT CASE ON ACCOUNT OF DISALLOWANCE OF BROUGHT FORWARD LOSSES PRIOR TO A.Y. 2003-04 DUE TO CHANGE OF SHAREHOLDING PATTERN AND THE APPLICATION OF PROVISIONS OF SECTION 79 OF THE I.T. ACT. THERE IS NO DISPUTE TO THE FACT THAT THE DISALLOWANCE MADE BY T HE AO HAS BEEN UPHELD BY THE TRIBUNAL VIDE ITA NO.546/PN/2009 ORDE R DATED 08- 06-2012. HOWEVER, IT IS ALSO A FACT THAT EVEN AFTE R DISALLOWANCE OF THE BROUGHT FORWARD BUSINESS LOSS THE INCOME DETERM INED U/S.115JB AT RS.58,60,328/- IS MORE THAN THE ASSESS ED INCOME DETERMINED AT RS.17,05,510/- DUE TO THE UNABSORBED DEPRECIATION FOR A.Y. 2002-03 AND A.Y. 2003-04. THEREFORE, THE ISSUE TO BE DECIDED IS AS TO WHETHER THE PROVISIONS OF SECTION U/S.271(1)(C) OF THE I.T. ACT ARE APPLICABLE IN SUCH CASE DUE TO ADD ITION MADE BY THE AO IN THE QUANTUM ASSESSMENT WHERE SUCH ASSESSE D INCOME IS LESS THAN THE BOOK PROFIT DETERMINED BY THE ASSESSE E U/S.115JB OF THE I.T. ACT. WE FIND AN IDENTICAL ISSUE HAD COME UP BEFORE THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. (SUPRA). THE HONBLE DELHI HIGH COURT AFTER C ONSIDERING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F GOLD COIN HEALTH FOOD LTD. (SUPRA) AND CBDT CIRCULAR NO.204 D ATED 24-07- 1976 HAD UPHELD THE DECISION OF THE TRIBUNAL CANCEL LING THE PENALTY LEVIED U/S.271(1)(C) OF THE I.T. ACT. THE R ELEVANT OBSERVATION OF THE HONBLE HIGH COURT AT PAGE 551 R EADS AS UNDER: 8 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. JUDGMENT OF THE SUPREME COURT IN GOLD COIN'S (SUPRA) CLARIFIES THAT E VEN IF THERE ARE LOSSES IN A PARTICULAR YEAR, PENALTY CAN BE IMPOSED AS EVEN IN THAT SITUATION THERE CAN BE A TAX EVASION. AS PER SECT ION 271(1)(C), THE PENALTY CAN BE IMPOSED WHEN ANY PERSON HAS CONCEAL ED THE PARTICULARS OF HIS INCOME OR FURNISHED INCORRECT PART ICULARS OF THE INCOME. ONCE THIS CONDITION IS SATISFIED, QUANTUM OF PE NALTY IS TO BE LEVIED AS PER CLAUSE (3) OF SECTION 271(1)( C) WHI CH STIPULATES THAT THE PENALTY SHALL NOT EXCEED THREE TIMES ' THE A MOUNT OF TAX SOUGHT TO BE EVADED'. THE EXPRESSION 'THE AMOUNT OF T AX SOUGHT TO BE EVADED' IS CLARIFIED AND EXPLAINED IN EXPLANATION 4 THERETO, AS PER WHICH IT HAS TO HAVE THE EFFECT OF REDUCING THE LOSS DECLARED IN THE RETURN OR CONVERTING THAT LOSS INTO INCOME. IT IS IN THIS CONTEXT THAT IN GOLD COINS (SUPRA) THE SUPREME COURT EXPLAINE D THE LEGAL POSITION AS UNDER (PAGE 313) : REFERENCE TO THE DEPARTMENT CIRCULAR NO.204 DATED JULY 24, 1976 REPORTED IN 1977 (110) ITR 21 (ST.) HAS ALSO SUBSTANTIA L RELEVANCE. THE SAME READS AS FOLLOWS (PAGE 313):- NEW EXPLANATION 4 DEFINED THE AMOUNT OF TAX SOUGHT TO BE EVADED. ACCORDING TO THE DEFINITION, THIS EXPRESSION WILL ORDINARILY MEAN THE DIFFERENCE BETWEEN THE TAX ON T HE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGE ABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCO ME IN RESPECT OF WHICH PARTICULARS HAVE BEEN CONCEALED. IN A CASE, HOWEVER, WHERE ON SETTING OFF THE CONCEALED INCOME, AGAINST ANY LOSS INCURRED BY THE ASSESSEE UNDER OTHER HEAD OF INCOME OR BROUGHT FORWARD FROM EARLIER YEARS, THE TOTAL INCOM E IS REDUCED TO A FIGURE LOWER THAN THE CONCEALED INCOME OR EVEN TO A MINUS FIGURE, THE TAX SOUGHT TO BE EVADED WILL MEAN THE TAX CHARGEABLE ON THE CONCEALED INCOME AS IF IT WERE THE TOTAL INCO ME. ANOTHER EXCEPTION TO THE GENERAL DEFINITION OF THE EXPRESSION TAX SOUGHT TO BE EVADED GIVEN EARLIER IS A CASE TO WHICH EXPLANATI ON 3 APPLIES. HERE, THE TAX SOUGHT TO BE EVADED WILL BE THE TAX CH ARGEABLE ON THE ENTIRE TOTAL INCOME ASSESSED. A COMBINED READING OF THE COMMITTEES RECOMMENDATIO NS AND THE CIRCULAR MAKES THE POSITION CLEAR THAT EXPLANATI ON 4 (A) TO SECTION 271 (1) (C) INTENDED TO LEVY THE PENALTY NO T ONLY IN A CASE WHERE AFTER ADDITION OF CONCEALED INCOME, A LOSS RETU RNED, AFTER ASSESSMENT BECOMES POSITIVE INCOME BUT ALSO IN A CASE WHERE ADDITION OF CONCEALED INCOME REDUCES THE RETURNED L OSS AND FINALLY THE ASSESSED INCOME IS ALSO A LOSS OR A MINUS FIGURE. THERE FORE, EVEN DURING THE PERIOD BETWEEN 1.4.1976 TO 1.4.2003 THE POSITION WAS THAT THE PENALTY WAS LEVIABLE EVEN IN A CASE WHER E ADDITION OF CONCEALED INCOME REDUCES THE RETURNED LOSS. WHEN THE WORD 'INCOME' IS READ TO INCLUDE LOSSES AS HELD IN HARPRASADS CASE (SUPRA) IT BECOMES CRYSTAL CLEAR THAT EV EN IN A CASE WHERE ON ACCOUNT OF ADDITION OF CONCEALED INCOM E THE RETURNED LOSS STANDS REDUCED AND EVEN IF THE FINAL ASSESS ED INCOME IS A LOSS, STILL PENALTY WAS LEVIABLE THEREON EVE N DURING THE PERIOD 1.4.1976 TO 1.4.2003. EVEN IN THE CIRCULAR D ATED 24.7.1976, REFERRED TO ABOVE, THE POSITION WAS CLARIFIED BY CENT RAL BUREAU OF DIRECT TAXES (IN SHORT CBDT). IT IS STATED THAT IN A CASE WHERE ON SETTING OFF THE CONCEALED INCOME AGAINST ANY LOSS INCUR RED BY THE ASSESSEE UNDER ANY OTHER HEAD OF INCOME OR BROUGHT FORW ARD FROM EARLIER YEARS, THE TOTAL INCOME IS REDUCED TO A FIGUR E LOWER THAN 9 THE CONCEALED INCOME OR EVEN TO A MINUS FIGURE THE P ENALTY WOULD BE IMPOSABLE BECAUSE IN SUCH A CASE 'THE TAX SOUGHT TO BE EVADED WILL BE TAX CHARGEABLE ON CONCEALED INCOME AS IF IT IS 'TOTAL INCOME'. 21. THE QUESTION, HOWEVER, IN THE PRESENT CASE, WOULD BE, AS TO WHETHER FURNISHING OF SUCH WRONG PARTICULARS HAD ANY THE EFFECT ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. UNDER THE SCHEME OF THE ACT, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUT ED UNDER THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SU CH TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. TH E HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYA BLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL IN COME OF THE ASSESSEE, OTHERWISE, BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE APPELLANT IN TERMS OF SECTION 115JB OF THE ACT. 22. IN THE PRESENT CASE, THE INCOME COMPUTED AS PER TH E NORMAL PROCEDURE WAS LESS THAN THE INCOME DETERMINED BY LEGAL FICTION NAMELY BOOK PROFITS UNDER SECTION 115JB OF THE AC T. ON THE BASIS OF NORMAL PROVISION, THE INCOME WAS ASSESSED IN THE NEGAT IVE I.E. AT A LOSS OF RS. 369521018. ON THE OTHER HAND, ASSESSMENT UNDER SECTION 115JB OF THE ACT RESULTED IN CALCULATION OF PROFITS AT RS. 40163180. 23. IN VIEW THEREOF, IN CONCLUSION, THE ASSESSMENT ORDER RECORDS AS FOLLOWS:- 'ASSESSED AT RS.4,01,63,180 U/S.115JB, BEING HIGHER OF T WO. INTEREST U/S.234B AND 234C HAS BEEN CHARGED AS PER THE PROVISIONS OF INCOME TAX ACT, 1961. PENALTY PROCEEDIN GS U/S. 271 (1)(C)OF THE INCOME TAX ACT, 1961 HAVE BEEN INITIAT ED. ISSUE NECESSARY FORMS.' 24. THE INCOME OF THE ASSESSEE WAS THUS ASSESSED UNDER SECTI ON 115JB AND NOT UNDER THE NORMAL PROVISIONS. IT IS IN TH IS CONTEXT THAT WE HAVE TO SEE AND EXAMINE THE APPLICATION OF E XPLANATION 4. 25. JUDGMENT IN THE CASE OF GOLD COINS (SUPRA), OBVIO USLY, DOES NOT DEAL WITH SUCH A SITUATION. WHAT IS HELD BY THE SUPREM E COURT IN THAT CASE IS THAT EVEN IF IN THE INCOME TAX RETURN FI LED BY THE ASSESSEE LOSSES ARE SHOWN, PENALTY CAN STILL BE IMPOSED IN A CASE WHERE ON SETTING OFF THE CONCEALED INCOME AGAINST ANY LOSS INCURRED BY THE ASSESSEE UNDER OTHER HEAD OF INCOME OR BROUGHT FORWARD FROM EARLIER YEARS, THE TOTAL INCOME IS REDUC ED TO A FIGURE LOWER THAN THE CONCEALED INCOME OR EVEN A MINUS FIGU RE. THE COURT WAS OF THE OPINION THAT THE TAX SOUGHT TO BE E VADED WILL MEAN THE TAX CHARGEABLE NOT AS IF IT WERE THE TOTAL INCOME. ONCE, WE APPLY THIS RATIONALE TO EXPLANATION 4 GIVEN BY TH E SUPREME COURT, IN THE PRESENT CASE, IT WILL BE DIFFICULT TO SU STAIN THE PENALTY PROCEEDINGS. REASON IS SIMPLE. NO DOUBT, THERE WAS CONC EALMENT 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 TH E CONTRARY, IT IS THE DEEMED INCOME ASSESSED UNDER SECTION 115 JB OF THE ACT WHICH HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIGHER OF THE TWO. TAX IS THUS PAID ON THE INCOME ASSESSED UNDER SECTIO N 115 JB OF THE ACT. HENCE, WHEN THE COMPUTATION WAS MADE UND ER SECTION 115JB OF THE ACT, THE AFORESAID CONCEALMENT HAD NO R OLE TO PLAY 10 AND WAS TOTALLY IRRELEVANT. THEREFORE, THE CONCEALME NT DID NOT LEAD TO TAX EVASION AT ALL. 26. THE UPSHOT OF THE AFORESAID DISCUSSION WOULD BE TO SU STAIN THE ORDER OF THE TRIBUNAL, THOUGH ON DIFFERENT GROUNDS. THEREFORE, WHILE WE DO NOT AGREE WITH THE REASONING AND APPROAC H OF THE TRIBUNAL, FOR OUR REASONS DISCLOSED ABOVE, WE ARE OF TH E OPINION THAT PENALTY COULD NOT HAVE BEEN IMPOSED EVEN IN RESP ECT OF CLAIM OF DEPRECIATION MADE BY THE ASSESSEE. THIS APPEAL IS ACCO RDINGLY DISMISSED. 10.1 THE SLP FILED BY THE REVENUE AGAINST THE ABOVE DECISION HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT REP ORTED IN 21 TAXMANN.COM 184. SINCE THE FACTS OF THE IMPUGNED A PPEAL ARE IDENTICAL TO THE FACTS DECIDED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. (SUPRA), TH EREFORE, PENALTY U/S.271(1)(C) OF THE I.T. ACT IS NOT LEVIAB LE IN THE INSTANT CASE. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A ) CANCELLING THE PENALTY AND THE GROUNDS RAISED BY THE REVENUE A RE DISMISSED. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 25-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED: 25 TH MARCH, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. THE D.R, B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE