DCIT, New Delhi V. M/s. Newgen Software Technologies Ltd., New Delhi

ITA 1751/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8264 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 07-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SR SANDEEP GUPTA
• Section: 115JB

Judgement Text

1 ITA NO. 1751/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI G. D. AGRAWAL, VICE P RESIDENT AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO. 1751/DEL/2014 (ASSESSM ENT YEAR-2009-10) DCIT CIRCLE-13(1) NEW DELHI (APPELLANT) VS NEWGEN SOFTWARE TECHNOLOGIES LTD. E-44/13, OKHLA, PHASE-II NEW DELHI AAACN0500F (RESPONDENT) APPELLANT BY SH. P. DAM KANUNJNA, SR.DR RESPONDENT BY SR. SANDEEP GUPTA, CA ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 27/12/2013 PASSED BY THE CIT(A)-XVI, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS: 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE BY DELETING THE PENALTY U/S 271(1)(C) OF THE ACT AMOUN TING TO RS.71,05,805/- IMPOSED FOR CONCEALMENT AND FURNISHI NG OF INACCURATE PARTICULARS ON THE ASSESSEE BY NOT CONSI DERING DATE OF HEARING 07.04.2016 DATE OF PRONOUNCEMENT 08.04.2016 2 ITA NO. 1751/DEL/2014 THE DETAILED FACTS GIVEN BY THE A.O IN ITS ASSESSME NT ORDER AND THE PENALTY ORDER. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS BY IGNORING THE 5 TH CLAUSE OF SECTION 115JB OF THE IT ACT WHEREIN IT SPECIFICALLY MENTIONED THAT THOUGH T AX IS PAID AS PER BOOK PROFIT UNDER COMPANIES ACT BUT ALL OTHER PROVISIONS OF THE ACT WILL BE APPLICABLE ON THE ASS ESSEE IN THE SIMILAR WAY AS WOULD HAVE BEEN OTHERWISE APPLIC ABLE. 3. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED BY GIVING RELIEF TO THE ASSESSEE BY IGNOR ING THE FACT THAT THE ASSESSEE HAS KNOWINGLY AND INTENTIONA LLY TRIED TO CONCEAL THE ACTUAL INCOME AND HAS SUBMITTE D INACCURATE PARTICULARS TO DITCH THE DEPARTMENT AND TO EVADE TAX. 4. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED BY IGNORING THE PROVISIONS OF THE CBDT IN CLAUSE NO. 2 OF CIRCULAR NO. 13 OF 2001, DATED 9/11/2001 WHEREIN THE BOARD HAS STATED THAT ALL THE PROVISIONS OF THE TAX INCLUDING THE PROVISION RELAT ING TO CHARGE, DEFINITIONS, RECOVERIES, PAYMENT, ASSESSMEN T, ETC., WOULD APPLY IN RESPECT OF THE PROVISIONS OF THIS SE CTION. 5. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 71,05,805/ - U/S 271(1)(C) OF THE ACT BY NOT CONSIDERING THAT THE C ASE OF THE ASSESSEE SQUARELY FALLS UNDER EXPLANATION 1 & 4 TO SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 AND THE ASSE SSEE HAD FAILED TO DISCHARGE ITS ONUS OF PROVING THAT TH ERE WAS NO FRAUD OR NEGLECT IN FILING THE CORRECT INCOME. 3. THE PENALTY ORDER WAS PASSED ON A BOOK PROFIT AD DITION AND NOT ON THE REGULAR INCOME. 3 ITA NO. 1751/DEL/2014 4. THE LD. AR SUBMITTED THAT AS PER CBDT CIRCULAR N O. 25/15 DATED 31 ST DECEMBER 2015, IT IS A SETTLED POSITION THAT PRIOR TO 1/4/2016 WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER THE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 115JB OF THE AC T, THEN PENALTY U/S 271(1)(C) OF THE ACT IS NOT ATTRACTED. IN THI S PARTICULAR CASE, THE PENALTY IS LEVIED ON THE BOOK PROFITS U/S 115JB OF THE ACT. HENCE, THE PENALTY DOES NOT SUSTAIN. THE LD. AR AL SO RELIED ON THE HON'BLE SUPREME COURTS DECISION IN CASE OF CIT VS. NALWA SONS INVESTMENT LTD. 327 ITR 523 WHEREIN THE HONBLE DEL HI HIGH COURTS FINDING WAS UPHELD AS TO WHEN THE COMPUTATI ON WAS MADE U/S 115JB OF THE ACT, THE CONCEALMENT HAD NO ROLE T O PLAY AND IS TOTALLY IRRELEVANT. THUS, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. 5. THE LD. DR RELIED ON PENALTY ORDER BUT CANNOT CO NTROVERT HON'BLE DELHI HIGH COURTS DECISION AS WELL AS THE SUPREME COURTS ORDER IN CASE OF CIT VS. NALWA SONS INVESTMENT LTD. 6. WE HAVE PERUSED ALL THE MATERIALS AND HEARD CONT ENTIONS OF THE PARTIES. THE CBDT CIRCULAR CLEARLY STATES THAT 271(1)(C) PENALTY CANNOT BE ATTRACTED IN CASE OF ADDITIONS U/S 115JB I.E. BOOK PROFIT. THE HON'BLE SUPREME COURT JUDGMENT ALSO REITERATES THE SAME. IN THE PRESENT CASE ALSO THE PENALTY IS IMPOSED ON THE ADDITIONS UNDER SECTION 115JB OF THE ACT WHICH IS NOT PERMISSIBLE. THUS THE CIT(A) HAS RIGHTLY DELETED THE PENALTY. THE ADDITION MADE IN THE ASSESSEES CASE IS TOTALLY PERVERSE AND WITHOUT ANY AUTHORITY OF LAW. 4 ITA NO. 1751/DEL/2014 7. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 TH OF APRIL, 2016. SD/- SD/- (G. D. AGRAWAL) (SUC HITRA KAMBLE) VICE PRESIDENT JUDICIAL MEMBER DATED: 08/04/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGIS TRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 07/04/2016 PS 2. DRAFT PLACED BEFORE AUTHOR 08/04/2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 8.04.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 8 .04.2016 PS 5 ITA NO. 1751/DEL/2014 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.