Sun Investments Private Ltd., New Delhi V. ACIT, New Delhi

ITA 2096/DEL/2011

• Counselvise Citation: 209620114 RSA 2011
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-10-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 28-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDDI SRIVASTAVA
• Section: 14A; 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER I.T.A .NO.-2096/DEL/2011 (ASSESSMENT YEAR-2005-06) SUN INVESTMENTS (P) LTD. VS. ASSTT. CIT 12 JINDAL CENTRE, BHIKAJI CAMA PLACE CIRCLE-9(1) , NEW DELHI.110066 NEW DELHI. PAN: AAACS0389M (APPELLANT) (RESPONDENT) ASSESSEE BY:-SH. K. SAMPATH, ADV. REVENUE BY:-SMT. NIDDI SRIVASTAVA, SR. DR ORDER PER RAJPAL YADAV JM. THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF A SSESSEE AGAINST THE ORDER OF LD. CIT (A) DATED 15.02.2011 PASSED FOR A. Y. 2005-06. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L D. CIT (A) HAS ERRED IN CONFIRMING THE PENALTY OF RS.8,93,910/- LEVIED U/S 271(1) (C) OF THE IT ACT. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT ASSESSEE HAS DECLARED NIL INCOME. IT HAS PAID TAX ON BOOK PROFIT U/S 2 115JB, THE BOOK PROFIT HAS BEEN DECLARED AT RS.11 ,60,09,550/-. THE INCOME ULTIMATELY HAS BEEN ASSESSED U/S 115JB BECAU SE THE ULTIMATE INCOME AS PER THE REGULAR ASSESSMENT WAS DETERMINED AT RS. 45,96,586/-. AFTER GIVING THE BENEFIT OF BROUGHT FORWARD LOSSES OF AY 1999-20 00 REPRESENTING A SUM OF RS.1,09,80,623/- THE INCOME HAS BEEN DETERMINED AT NIL AND TAXES HAVE BEEN COMPUTED U/S 115JB ONLY. THE AO HAS INITIATED THE PENALTY PROCEEDING QUA THE 3 ADDITIONS MADE FOR THE PURPOSE OF REGULAR ASSESSMENT I.E.; DISALLOWANCE U/S 14A RS.11,53,708/-, DISALLOWANCE O F TRAVELING EXPENSES RS.15,04,326/- AND DISALLOWANCE OUT OF INTEREST EXP ENSES RS.9,38,552/-. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. NALWA SON S INVESTMENTS LTD. REPORTED IN 327 ITR 543 HAS HELD THAT IF ASSESSMENT IS ULTIMATELY MADE U/S 115JB THEN PENALTY FOR THE ADDITIONS MADE FOR REGUL AR ASSESSMENT WOULD NOT BE IMPOSABLE. THE LD. COUNSEL ALSO POINTED OUT THAT HONBLE SUPREME COURT ALSO DISMISSED SLP AGAINST THIS JUDGMENT, HE PLACED ON RECORD COPY OF THE SUPREME COURTS DECISION RENDERED ON 4 TH MAY 2012. 4. THE LD. DR ON THE HAND WAS UNABLE TO CONTROVERT THE CONTENTIONS OF LD. COUNSEL FOR THE ASSESSEE. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY, THE HONBLE DELHI HIGH COURT IN T HE CASE OF NALWA SONS INVESTMENTS LTD. HAS OBSERVED THAT AS PER THE SCHEM E OF IT ACT 1961, THE 3 TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDE R THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME AS COM PARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFIT COMPUTED U/S 115JB OF THE ACT. THE HIGHER OF THE TWO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAXES IS PAYABLE WITH REFERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISION IS HIGHER, SUCH AMOUNT IS THE TOTA L INCOME OF THE ASSESSEE, OTHERWISE, BOOK PROFIT ARE DEEMED AS THE TOTAL IN COME OF THE ASSESSEE IN TERMS OF SECTION 115JB OF THE ACT. CONCEALMENT OF I NCOME WOULD HAVE NO ROLE TO PLAY AND WOULD NOT LEAD TO TAX EVASION WHEN ULTIMATELY TAXES WERE PAID ON BOOK PROFIT. THE ADDITIONS MADE WHILE COM PUTING THE NORMAL INCOME WOULD BE IRRELEVANT TO CONSIDER FOR PENALTY BECAUSE TOTAL INCOME HAS NOT BE DETERMINED ON THE BASIS OF THOSE ADDITIONS. IN THE PRESENT CASE THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED U/S 115J B AND THEREFORE, AS PER THE HONBLE DELHI HIGH COURTS DECISION PENALTY IS NOT IMPOSABLE. WE ALLOW THE APPEAL OF THE ASSESSEE AND DELETE THE PENALTY. ORDER PRONOUNCED IN THE OPEN COURT ON 24/10/2013. SD/- SD/- (T. S. KAPOOR) (R AJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 24/10/2013 *AK VERMA* COPY FORWARDED TO: 4 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR