DCIT, New Delhi V. M/s Eastern India Powertech Ltd., Gurgaon

ITA 200/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3555 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 13-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KISHORE
• Assessee Lawyers: ROHIT JAIN
• Keywords: Deemed to accrue or arise in india
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 200/DEL/2011 ASSESSMENT YEAR: 2004-05 DEPUTY CIT, VS. M/S. EASTERN INDIA POWERTECH LTD., CIRCLE 11(1), (FORMERLY DLF POWER LTD.) DLF NEW DELHI. GALLERIA), 12 TH FLOOR, DLF CITY, PHASE IV, GURGAON-122009 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B. KISHORE, SR.DR RESPONDENT BY: SHRI ROHIT J AIN, AR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 18.10.2010 PASSED FOR ASSESSMENT YEAR 2004-05. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN DELETING THE PENALTY OF RS.97,69,249 IMPOSED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF GENERATION OF POWERS AND EXECUTING TURNKEY PROJECT. IT HAS FILED ITS RETURN OF INCOME ON 29.10 .2004 DECLARING LOSS OF RS.2,72,31,272. THE ASSESSEE HAS SHOWN THE BOOK PRO FIT AT RS.7,03,23,450 AND HAS PAID TAX UNDER SEC. 115JB OF THE ACT. IT EM ERGES OUT FROM THE RECORD 2 THAT ASSESSEE HAS TWO DIVISIONS, NAMELY, POWER DIVI SION AND ENERGY DIVISION. POWER DIVISION IS ELIGIBLE FOR TAX HOLIDAY UNDER SE C. 80IA OF THE ACT. IT HAS SHOWN PROFITS OF RS.26,04,08,553 UNDER THE HEAD PO WER DIVISION. IN THE ENERGY DIVISION, THERE WAS A LOSS OF RS.2,72,31,272 FOR THE PURPOSE OF COMPUTING GROSS TOTAL INCOME, ASSESSEE HAS SET OFF THIS LOSS AND DETERMINED GROSS TOTAL INCOME AT RS.23,31,77,281. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SEC. 80-IA ON THE PROFIT OF THE POWER DIVISIO N AT THE ENTIRE PROFIT I.E. RS.26,04,08,553. ACCORDING TO THE ASSESSING OFFICER , ASSESSEE HAD CLAIMED EXCESS DEDUCTION OVER THE GROSS TOTAL INCOME AMOUNT ING TO RS.2,72,31,272 WHICH WAS A LOSS CLAIMED TO BE CARRIED FORWARD TO T HE SUBSEQUENT YEARS UNDER THE NORMAL PROVISIONS OF THE INCOME-TAX ACT, 1961. HENCE, HE INITIATED THE PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT. THE ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT NO SATI SFACTION WAS RECORDED IN THE ASSESSMENT ORDER EXHIBITING THE FACT THAT ASSES SEE HAS CONCEALED THE PARTICULARS OF INCOME OR FURNISHED INACCURATE PARTI CULARS. ALTERNATIVELY, IT CONTENDED THAT ITS INCOME HAS BEEN ULTIMATELY ASSES SED UNDER SEC. 115JB OF THE ACT. THERE IS NO ADDITION IN THE BOOK PROFIT. T HE INCOME DISCLOSED BY THE ASSESSEE UNDER MAT PROVISIONS HAS ULTIMATELY BEEN A CCEPTED BY THE ASSESSING OFFICER. THUS, THERE IS NO TAX SOUGHT TO BE EVADED BY THE ASSESSEE AND NO PENALTY UNDER SEC. 271(1)(C) OF THE ACT IS L EVIABLE. 3 3. ASSESSING OFFICER WAS NOT SATISFIED WITH THE CON TENTIONS OF THE ASSESSEE AND HE IMPOSED A PENALTY OF RS.97,69,249. ON APPEAL, LEARNED CIT(APPEALS) DELETED THE PENALTY BY FOLLOWING THE O RDER OF THE ITAT IN THE CASE OF JINDAL POLYESTER & STEEL LTD. VS. DCIT AS W ELL AS THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAL WA SONS INVESTMENTS. IT WAS NOT REPORTED AT THAT POINT OF TIME BUT NOW REPO RTED IN 327 ITR 543. 4. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. AS WELL AS BY THE ORDER OF THE ITA T PASSED IN THE IMMEDIATELY PRECEDING YEAR. IN THAT ASSESSMENT YEAR UNDER SIMILAR CIRCUMSTANCES, A PENALTY OF RS.15,37,642 HAS BEEN I MPOSED UPON THE ASSESSEE WHICH WAS DELETED BY THE LEARNED CIT(APPEA LS). THE ITAT HAS DISMISSED THE APPEAL OF THE REVENUE BEARING ITA NO. 2524/DEL/07. HE PLACED ON RECORD COPY OF THE ITATS ORDER. LEARNED DR WAS UNABLE TO CONTROVERT THE CONTENTIONS OF LEARNED COUNSEL FOR THE ASSESSEE . 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'B LE DELHI HIGH COURT. THE 4 RELEVANT OBSERVATIONS MADE BY THE HON'BLE HIGH COUR T IN THE CASE OF NALWA SONS (SUPRA) READ AS UNDER: 21. UNDER THE SCHEME OF THE ACT, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDER THE NORMAL PROVISIONS OF THE A CT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARED WITH THE PRESCRIBE D PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SEC. 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISIONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCO ME OF THE ASSESSEE, OTHERWISE, BOOK PROFITS ARE DEEMED AS THE TOTAL I NCOME OF THE APPELLANT IN TERMS OF SECTION 115JB OF THE ACT. 22. IN THE PRESENT CASE, THE INCOME COMPUTED AS PER THE NORMAL PROCEDURE WAS LESS THAN THE INCOME DETERMINED BY TH E LEGAL FICTION, NAMELY, BOOK PROFIT UNDER SECTION 115JB OF THE AC T. ON THE BASIS OF NORMAL PROVISION, THE INCOME WAS ASSESSED IN THE NE GATIVE, I.E., AT A LOSS OF RS.36,95,21,018. ON THE OTHER HAND, ASSESSM ENT UNDER SEC. 115JB OF THE ACT RESULTED IN CALCULATION OF PROFITS AT RS.4,01,63,180. ASSESSED AT RS.4,01,63,180 UNDER SECTION 115JB, BEING HIGHER OF TWO. INTEREST UNDER SECTIONS 234B AND 234C HAS B EEN CHARGED AS PER THE PROVISIONS OF THE INCOME-TAX ACT , 1961. PENALTY PROCEEDINGS UNDER SEC. 271(1)(C) OF THE INC OME-TAX ACT, 1961 HAVE BEEN INITIATED. ISSUE NECESSARY FORMS. 5 THE INCOME OF THE ASSESSEE WAS THUS ASSESSED UNDER SECTION 115JB AND NOT UNDER THE NORMAL PROVISIONS. IT IS IN THIS CONTEXT THAT WE HAVE TO SEE AND EXAMINE THE APPLICATION OF EXPLA NATION 4. THE JUDGMENT IN THE CASE OF GOLD COIN [2008] 304 IT R 308, OBVIOUSLY, DOES NOT DEAL WITH SUCH A SITUATION. WHA T IS HELD BY THE SUPREME COURT IN THAT CASE IS THAT EVEN IF IN THE I NCOME-TAX RETURN FILED BY THE ASSESSEE LOSSES ARE SHOWN, PENALTY CAN STILL BE IMPOSED IN A CASE WHERE ON SETTING OFF THE CONCEALED INCOME AG AINST ANY LOSS INCURRED BY THE ASSESSEE UNDER OTHER HEADS OF INCOM E OR BROUGHT FORWARD FROM EARLIER YEARS, THE TOTAL INCOME IS RED UCED TO A FIGURE LOWER THAN THE CONCEALED INCOME OR EVEN A MINUS FIG URE. THE COURT WAS OF THE OPINION THAT THE TAX SOUGHT TO BE EVADE D WILL MEAN THE TAX CHARGEABLE ON THE CONCEALED INCOME AS IF IT WE RE THE TOTAL INCOME. ONCE, WE APPLY THIS RATIONALE TO EXPLANATION 4 GIVE N BY THE SUPREME COURT, IN THE PRESENT CASE, IT WILL BE DIFFICULT TO SUSTAIN THE PENALTY PROCEEDINGS. REASON IS SIMPLE. NO DOUBT, THERE WAS CONCEALMENT BUT THAT HAD ITS REPERCUSSIONS ONLY WHEN THE ASSESSMENT WAS DONE UNDER THE NORMAL PROCEDURE. THE ASSESSMENT AS PER THE NOR MAL PROCEDURE WAS, HOWEVER, NOT ACTED UPON. ON THE CONTRARY, IT I S THE DEEMED INCOME ASSESSED UNDER SECTION 115JB OF THE ACT WHIC H HAS BECOME THE BASIS OF ASSESSMENT AS IT WAS HIGHER OF THE TWO . TAX IS THUS PAID ON THE INCOME ASSESSED UNDER SEC. 115JB OF THE ACT. HE NCE, WHEN THE COMPUTATION WAS MADE UNDER SECTION 115JB OF THE ACT , THE AFORESAID CONCEALMENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRR ELEVANT. THEREFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL . 6 6. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE D ELHI HIGH COURT AS WELL AS THE ORDER OF THE ITAT IN ASSESSMENT YEAR 20 03-04, WE DO NOT FIND ANY MERIT IN THIS APPEAL BECAUSE, THERE IS NO DISP ARITY ON FACTS AND LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY PLACED RELIAN CE UPON THE ORDER OF THE ITAT AS WELL AS THE JUDGMENT OF HON'BLE DELHI HIGH COURT. 7. IN VIEW OF THE ABOVE DISCUSSION, THIS APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 08.07.201 1 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08/07/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR