Jindal ITF Ltd, Delhi V. DCIT,Circle-13(2), Delhi

ITA 2342/DEL/2022

AI Insights

Jindal ITF Ltd. appealed against the penalty order passed by the Assessing Officer under Section 271(1)(c) of the Income Tax Act, 1961, concerning the Assessment Year 2015-16. The penalty was imposed due to a disallowance related to the premium conversion to Compulsorily Convertible Debentures (CCDs). The Tribunal considered the total income returned at a loss under normal provisions and book loss under Section 115JB, which were assessed at lower figures. The Tribunal referenced CBDT Circular No. 25/2015 and the Delhi High Court judgment in the case of Pr. CIT vs. National Textiles Corporation Ltd., which supported the view that no penalty should be levied if the tax under normal provisions is less than that under MAT provisions. Additionally, the Tribunal noted that the assessee had voluntarily disclosed a clerical mistake in the premium claimed on redemption/conversion of CCDs, further supporting the cancellation of the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121573 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 22-09-2022
• Other Referred Cases: Pr. CIT vs. National Textiles Corporation Ltd. (2023) 116 CCH 0319 (Del)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 11; 115JB; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.2342/DEL/2022 Assessment Year 2015-16 Jindal ITF Ltd. 28, Najafgarh Road Post Office- Ramesh Nagar New Delhi. v. DCIT Circle-13(2) Delhi. TAN/PAN: AABCJ9263C (Appellant) (Respondent) Assessee by: Shri Vinod Kumar Bindal CA Ms. Rinky Sharma Adv. Department by: Shri Anuj Garg Sr.DR Date of hearing: 08 08 2023 Date of pronouncement: 24 08 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he capti oned app eal has b ee n f il ed b y the A sse ssee a gainst the order of the Co mmiss i oner of Income Ta x (A ppeals )-XX I II, N ew D elhi [ ‘C IT (A )’ i n s hor t] da te d 25. 07. 2022 a rising fr om the penal t y order da ted 29. 0 6. 2018 pass ed b y t he Assessing O f fi ce r (A O ) under Secti on 271 (1) (c) of t he Inc ome Tax A ct, 1961 ( the A ct) c onc er ning A Y 2015- 16. 2. A s per its grou nds of a ppeal, the asse ssee has cha lle nge d th e imposi t io n of pe na lt y of Rs. 1, 7 8, 86, 735 /- t ow ards disall ow ance on account of pre mi um c onversion t o C ompulsoril y C onverti ble D ebentures (C CD s) a moun ti ng to Rs . 5, 26, 23,5 22/ -. T he aforesaid dis al low ance ha s res ulte d in reduct io n of returned l oss to that I.T.A. No.2342/Del/2022 2 extent. 3. When the matter w as calle d fo r hearin g, the ld. couns el for the asse ssee poi nt ed out that the t otal inco me returned b y the assessee a t a l oss o f Rs. 210, 33, 45, 133/ - un der t he normal pro visions o f the A ct a nd boo k loss u nde r Sec tion 115JB of the A ct at Rs. 150,64, 75, 547/- w as bro ught dow n a nd assessed at Rs. 183, 92, 07, 084 /- an d Rs. 124. 23, 37, 487 /- respec t ivel y w hi le fra mi ng the ass ess me nt order unde r Sect io n 143( 3) of the A ct. 4. H avi ng regard to the losse s assessed at a lowe r figure u nde r nor ma l pr ovis ion and Sec ti on 115JB of t he A ct, the addi ti on/ dis allow a nce u nde r no rma l pr ovisio ns w ould not invi te penal t y under Section 271(1 )(c ) of t he Act. 5. T he C BD T C ircular N o. 25/2015 dated 31 s t D ecembe r, 20 15 has a ddres sed the issue d ir ec tl y. T he re levant C BD T Ci rc ular is re pro duc ed h ereunder: “ C I R C U L A R N O . 2 5 / 2 0 1 5 F . N o . 2 7 9 / M i s c . / 1 4 0 / 2 0 1 5 / I T . J G o v e r n m e n t o f I n d ia M i n i s t r y o f F i n a n c e C e n t r a l B o a rd o f D i r e c t T a x e s N e w D e l h i , 3 1 s t D e c e m b e r , 2 0 1 5 S u b j e c t : P e n a l t y u / s . 2 7 1 ( 1 ) c ) w h e r e i n a d d i t i o n s / d is a l l o w a n c e s m a d e u n d e r n o r m a l p r o v i s i o n s o f t h e I n c o m e T a x A c t , 1 9 6 1 b u t t a x l e v i e d u n d e r M A T p r o v i s i o n s u / s 1 1 5 J B / 1 1 5 J C , f o r c a s e s p r i o r t o A Y . 2 0 1 6 - 1 7 - r e g . - S e c t i o n 1 1 5 J B o f t h e A c t i s a s p e c i a l p ro v i s i o n fo r l e v y o f M i n i m u m A l t e r n a t e T a x o n Co m p a n i e s , i n s e r t e d b y F in a n c e A c t 2 0 0 0 w i t h e f f e c t f r o m 1 - 4 - 2 0 0 1 . 2 . U n d e r c l a u s e ( i i i ) o f s u b - s e c t i o n ( 1 ) o f s e c t i o n 2 7 1 o f t h e A c t , p e n a l t y f o r c o n c e a l m e n t o f i n c o m e o r f u r n i s h i n g in a c c u r a t e p a r t i c u l a r s o f i n c o m e i s d e t e r m i n e d b a s e d o n t h e " a m o u n t o f t a x s o u g h t t o b e e v a d e d " w h i c h h a s I.T.A. No.2342/Del/2022 3 b e e n d e f i n e d i n t e r - a l i a , a s t h e d i f f e r e n c e b e t w e e n t h e t a x d u e o n t h e i n c o m e a s s e s s e d a n d t h e t a x w h i c h w o u ld h a v e b e e n ch a r g e a b l e h a d s u c h t o t a l i n c o m e b e e n r e d u c e d b y t h e a m o u n t o f c o n c e a l ed in c o m e o r i n c o m e in r e s p e c t o f w h i c h i n a c c u r a t e p a r t i c u l a r s h a d b e e n f il e d 3 . I n t h i s c o n t e x t , H o n ' b l e D e l h i H i g h C o u r t i n i t s j u d g m e n t d a t e d 2 6 . 8 . 2 0 1 0 i n I TA N o . 1 4 2 0 o f 2 0 0 9 i n t h e c a s e o f N al w a S o n s I n v e s t m e n t L t d . ( a v a i l a b l e i n N J R S a s 2 0 1 0 - L L - 0 8 2 6 - 2 ) . h e l d t ha t w h e n t h e t a x p a y a b l e o n i n c o m e c o m p u t e d u n d e r n o r m a l p r o c e d u r e is l e s s t h a n t h e t a x p a y a b l e u n d e r t h e d e e m i n g p r o v i s i o n s o f S e c t i o n 1 1 5J B o f t h e A c t , t h e n p e n a l t y u n d e r s e c t i o n 2 7 1 (1 ) ( c ) o f t h e A c t c o u l d n ot b e i m p o s e d w i t h r e f e r e n c e t o a d d i t i o n s / d i s a l l o w a n c e s m a d e u n d e r n or m a l p r o v i s i o n s . T h e j u d g m e n t h a s a t t a i n e d f i n a l i t y . 4 . S u b s e q u e n t l y , t h e p r o v i s i o n s o f E x p l a n a t i o n 4 t o s u b - s e c t i o n ( 1 ) o f s e c t i o n 2 7 1 o f t h e A c t h a v e b e e n s u b s t i t u t e d b y F i na n c e A c t , 2 0 1 5 , w h i c h p r o v id e f o r t h e m e t h o d o f c a l c u l a t i n g t h e a m o u n t o f t a x s o u g h t t o b e e v a d e d fo r s i t u a t i o n s e v e n w h e r e t h e i n c o m e d e t e r m in e d u n d e r t h e g e n e r a l p r o v i s i o n s i s l e s s t h a n t h e i n c o m e d e c l a r e d f o r t h e p u rp o s e o f M A T w / s 1 1 5 J B o f t h e A c t . T h e s u b s t i t u t e d E x p l a n a t i o n 4 i s a p p l i c a b l e p ro s p e c t i v e l y w . e . f . 0 1 . 0 4 . 2 0 1 6 . 5 . A c c o r d in g l y , i n v i e w o f t h e D e l h i H i g h C o u r t j u dg m e n t a n d s u b s t i t u t i o n o f E x p l a n a t i o n 4 o f s e c t i o n 2 7 1 o f t h e A c t w i t h p r o s p e c t i v e e f f e c t , i t i s n o w a s e t t l e d p o s i t i o n t h a t p r i o r t o 1 / 4 / 2 0 1 6 , w h e r e t h e i n c o m e t a x p a y a b l e o n t h e t o t a l i n c o m e a s c o m p u t e d u n d e r th e n o r m a l p r o v i s i o n s o f t h e A c t i s l e s s t h a n th e t a x p a y a b l e o n t h e b o o k p r o f i t s w / s 1 1 5 J B o f t h e A c t , t h e n p e n a l t y u n d e r 2 7 1 ( 1 ) c ) o f t h e A c t , i s n o t a t t r a c t e d w i t h r e f e r e n c e t o a d d i t i o n s / d i s a l l o w a n c e s m a d e u n d e r n o r m a l p r o v is i o n s . I t i s f u r t h e r c l a r i f i e d t h a t i n c a s e s p r i o r t o 1 . 4 . 2 0 1 6 , i f a n y ad ju s t m e n t i s m a d e i n t h e i n c o m e c o m p u t e d f o r t h e p u r p o s e o f M A T , t h e n t h e l ev y o f p e n a l t y w / s 2 7 1 ( 1 ) ( c ) o f t h e A c t , w i l l d e p e n d o n t h e n a t u r e o f a d j u s t m e n t . 6 . T h e a b o v e s e t t l e d p o s i t i o n i s t o b e fo l l o w e d i n r e s p e c t o f s e c t i o n 1 1 5 J C o f t h e A c t a l s o . 7 . A c c o r d i n g l y , t h e B o a r d h e r e b y d i r e c t s t h a t n o a pp e a l s m a y h e n c e f o r t h b e f i l e d o n t h i s g r o u n d a n d a p p e a l s a l r e a d y f i l e d , i f a n y , o n t h i s i s s u e b e f o r e v a r i o u s Co u r t s / T r i b u n a l s m a y b e w i t h d r a wn / n ot p r e s s e d u p o n . Th i s m a y b e b ro u g h t t o t h e n o t i c e o f a l l c o n c e r n e d . D C I T ( O S D ) ( I T J ) , C B D T , N e w D e l h i ” 6. T he a bove noted CB DT cir cu la r is sel f s pea king and sel f explana tor y. The assess men t yea r in the pres ent ca se is A ssess me nt Y ear 2015- 16 a nd t he re fore, pe na lt y u nder Secti on 271(1)(c) cann ot be i mp os ed ow ing t o th e fac t t hat E xp lanation -4 to Sect io n 271(1)( c) is ap pli cab le pr ospect i vel y f rom A ssess ment Y ear 2016-1 7 and no t p ri or theret o. We als o si mu ltaneous l y tak e I.T.A. No.2342/Del/2022 4 note of the judgme nt re ndered b y th e H on’b le Del hi H i gh Cou rt in the c ase of Pr. CIT vs. Nati onal Text ile s Cor poratio n Ltd. (2023) 116 C CH 0319 (D el) w he re in i t w as obs er ved t ha t w he re on facts, no a dvantage acc rued t o the ass es see ow i ng t o alleged w ro ng cla ims giv en the f act t ha t i t h as burge oning una bs or be d losses, the bona f id es of t he assess ee s ta nds pro ved for the re aso n t ha t it coul d not ha ve gai ned an yt hing b y maki ng al leged w rong clai ms. 7. T he re is ye t an oth er reason to agree w ith the cont enti ons of the ass esse e for exonerat i on fr om t he cl ut ches of penalt y proceed ings under Sect ion 271( 1)( c) o f the A ct. T he assesse e in the ins ta nt cas e s u o m otu disc overe d ce rt ai n mi st akes c re pt i n the co mputati on of the p re mi um pa ya bl e on redempti on and t he re fore, the assess ee ac ti ng bona fi de infor me d t he A ssess in g O ffice r v ide let ter dat ed 07. 12. 2017 a nd s tated that ‘durin g the assess ment proceed ings it came t o our notic e tha t the assesse e under the re vis ed return has mis tak enl y cl ai med pre mium of Rs. 38, 82,91, 683/ - on re de mpti on / conve rs ion of compuls oril y conve rtible de be nt ures (CCD S) agains t c orr ect fi gure of Rs. 33, 56,68, 161/ - ow ing t o cl eric al mi stake. A revised calc ul at ion sheet w as a lso pla ced before t he A ss essing O ffic e r.’ T he loss w as assessed at the revi sed pre mi um a mo unt base d on i nformat i on volunta ri ly f urn is hed by the asse ssee but how ev er pena lty f or s uch exce ssive cla im w as ini tia te d on the ground that h ig her clai m w as a de li be ra te act of the asse ssee. W e do not s ee much s ubs tance i n suc h rati ona le. Th e assesse e, as noted, has b urgeoning l osses at it s dis posal a nd thus no in duc emen t t o clai m e xces si ve l os ses wit hout an y cor resp ondi ng be ne fi t cannot be vis uali zed. T he bona fides of the ass essee s tands lar gel y pr ove d. I.T.A. No.2342/Del/2022 5 8. T hus i n the light of the CBD T C ircular and the ju dicial dicta, w e find merit i n t he plea of the ass essee for exo nerati on fro m pe na lt y under Sec ti on 27 1(1) (c ) of t he Act. We t hus se t as ide the order of t he CIT(A ) and di re ct t he A ssessi ng O fficer to ca ncel the penal ty i n ques ti on. 9. In the res ul t, the appeal of t he asses see is allow e d. Order was pronounced in the open Court on 24/08/2023. Sd/- Sd/- [KUL BHARAT] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /08/2023 Prabhat