The DCIT, Circle-8, Ahmedabad V. Suraj Impex Pvt.. Ltd., Ahmedabad

ITA 2502/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5908 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 09-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G C PIPARA
• Keywords: Deemed to accrue or arise in india
• Section: 143(3); 234B; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.2502/AHD/2014 ASSTT. YEARS: 2010-11 DCIT, CIR.8 AHMEDABAD. VS. SURAJ IMPEX P.LTD. SURAJ HOUSE USMANPURA AHMEDABAD. PAN : AACCS 9971 R ( APPLICANT ) ( RESPONENT ) REVENUE BY : SHRI PRASOON KABRA, SR.DR ASSESSEE BY : SHRI G.C. PIPARA / DATE OF HEARING : 04/05/2017 / DATE OF PRONOUNCEMENT: 15/05/2017 &'/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: REVENUE IS IN APPEAL BEFORE US AGAINST ORDER OF THE LD.CIT(A)-XIV, AHMEDABAD DATED 18.6.2014 PASSED FOR THE ASSTT.YEAR 2010-11. 2. SOLITARY GRIEVANCE OF THE REVENUE IS THAT THE LD .CIT(A) HAS ERRED IN DELETING PENALTY OF RS.10,97,647/- WHICH WAS IMPOSE D BY THE AO UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30.9.2010 DECLARING A NEGATIVE INCOME OF RS.(-)1 ,16,69,148/-. THE AO SELECTED CASE OF THE ASSESSEE FOR SCRUTINY, A NOTIC E UNDER SECTION 143(2) WAS ISSUED AND SERVE UPON THE ASSESSEE. HE PASSED ASS ESSMENT ORDER ON ITA NO.2502/AHD/2014 2 19.3.2013 UNDER SECTION 143(3) OF THE ACT. THE LD. AO HAS COMPUTED INCOME OF THE ASSESSEE AS UNDER: 6. IN VIEW OF THE ABOVE, THE TOTAL INCOME OF THE A SSESSEE IS COMPUTED AS UNDER: TOTAL INCOME AS PER RETURN OF INCOME (-) RS.1,1,69,148/- ADD: ADDITIONS/ DISALLOWABLE AS DISCUSSED ABOVE 1. DISALLOWANCE U/S.14A RS.3,64,250/- 2. DISALLOWANCE U/S.94(7) RS.1,07,327/- ASSESSED INCOME (-)RS.1,11,97,571/- I.E. (-)RS.1,11,97,570/- SHORT TERM CAPITAL GAIN OF RS.61,60,000/- IS TO BE CONSIDERED FOR TAXATION AT NORMAL RATES AND NOT AT CONCESSIONAL RA TE. BOOK PROFIT : RS.77,01,710/- ADD: ADDITION U/S.14A : RS. 3,64,250/- RS.80,65,960/- SINCE TAX PAYABLE UNDER THE NORMAL PROVISIONS OF TH E ACT IS LESS THAN THE TAX AS PER SECTION 115JB, TAX SHALL BE CHARGED U/S.115JB OF THE ACT. 4. HE INITIATED PENALTY PROCEEDINGS UNDER SECTION 2 71(1)(C) OF THE ACT AND FOR THE PURPOSE OF VISITING THE ASSESSEE WITH PENAL TY, HE HAS TAKEN INTO CONSIDERATION THREE DISALLOWANCES MENTIONED IN THE PENALTY ORDER AS UNDER: I) DISALLOWANCE U/S.14A RS.3,64,250/- II) DISALLOWANCE U/S.94(7) OF THE ACT RS.1,07,327/- ITA NO.2502/AHD/2014 3 III) TREATMENT OF SHORT TERM CAPITAL GAIN AT NORMAL RATE INSTEAD OF 15% AS DECLARED BY THE ASSESSEE RS.61,60,000/- HE ACCORDINGLY IMPOSED PENALTY OF RS.10,97,647/-. 5. ON APPEAL, THE LD.CIT(A) HAS DELETED PENALTY BY FOLLOWING DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NAL WA SONS INVESTMENT LTD., 327 ITR 543. ACCORDING TO THE LD.CIT(A) TAXE S HAVE BEEN LEVIED AGAINST THE ASSESSEE ON THE BASIS OF BOOK PROFIT, AND THERE FORE, ADDITIONS MADE TO THE NORMAL COMPUTATION OF INCOME HAS NO CONSEQUENCE AND PENALTY COULD NOT BE IMPOSED ON THESE ADDITIONS. WE FIND THAT AGAINST T HIS DECISION, SLP HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT ON 4.5.2012. THE DISCUSSION MADE BY THE HONBLE DELHI HIGH COURT IS WORTH TO NOTE IN THIS ASPECT, WHICH READS AS UNDER: 21. THE QUESTION, HOWEVER, IN THE PRESENT CASE, WOU LD BE, AS TO WHETHER FURNISHING OF SUCH WRONG PARTICULARS HAD AN Y THE EFFECT ON THE AMOUNT OF TAX SOUGHT TO BE EVADED. UNDER THE SC HEME OF THE ACT, THE TOTAL INCOME OF THE ASSESSEE IS FIRST COMPUTED UNDE R THE NORMAL PROVISIONS OF THE ACT AND TAX PAYABLE ON SUCH TOTAL INCOME IS COMPARED WITH THE PRESCRIBED PERCENTAGE OF THE BOOK PROFITS COMPUTED UNDER SECTION 115JB OF THE ACT. THE HIGHER OF THE T WO AMOUNTS IS REGARDED AS TOTAL INCOME AND TAX IS PAYABLE WITH RE FERENCE TO SUCH TOTAL INCOME. IF THE TAX PAYABLE UNDER THE NORMAL PROVISI ONS IS HIGHER, SUCH AMOUNT IS THE TOTAL INCOME OF THE ASSESSEE, OTHERWI SE, BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE APPELLANT IN TERMS OF SECTION 115JB OF THE ACT. IN THE PRESENT CASE, THE INCOME COMPUTED AS PER THE NORMAL PROCEDURE WAS LESS THAN THE INCOME DETERMINED BY LE GAL FICTION NAMELY BOOK PROFITS UNDER SECTION 115 JB OF THE ACT. ON THE BASIS OF N ORMAL PROVISION, THE INCOME WAS ASSESSED IN THE NEGATIVE I.E. AT A LOSS OF RS. 369521018. ON THE OTHER HAND, ASSESSMENT UNDER SECT ION 115 JB OF THE ACT RESULTED IN CALCULATION OF PROFITS AT RS. 40163 180. ITA NO.2502/AHD/2014 4 IN VIEW THEREOF, IN CONCLUSION, THE ASSESSMENT ORDE R RECORDS AS FOLLOWS:- 'ASSESSED AT RS. 40163180 U/S 115 JB, BEING HIGHER OF TWO. INTEREST U/S 234B AND 234C HAS BEEN CHARGED AS PER THE PROVISIONS OF INCOME TAX ACT, 1961. PENALTY PROCEED INGS U/S 271 (1) OF THE INCOME TAX ACT, 1961 HAVE BEEN INITIAT ED. ISSUE NECESSARY FORMS.' THE INCOME OF THE ASSESSEE WAS THUS ASSESSED UNDER SECTION 115 JB AND NOT UNDER THE NORMAL PROVISIONS. IT IS IN TH IS CONTEXT THAT WE HAVE TO SEE AND EXAMINE THE APPLICATION OF EXPLANAT ION 4. JUDGMENT IN THE CASE OF GOLD COINS (SUPRA), OBVIOU SLY, DOES NOT DEAL WITH SUCH A SITUATION. WHAT IS HELD BY THE SUP REME COURT IN THAT CASE IS THAT EVEN IF IN THE INCOME TAX RETURN FILED BY THE ASSESSEE LOSSES ARE SHOWN, PENALTY CAN STILL BE IMPOSED IN A CASE W HERE ON SETTING OFF THE CONCEALED INCOME AGAINST ANY LOSS INCURRED BY T HE ASSESSEE UNDER OTHER HEAD OF INCOME OR BROUGHT FORWARD FROM EARLIE R YEARS, THE TOTAL INCOME IS REDUCED TO A FIGURE LOWER THAN THE CONCEA LED INCOME OR EVEN A MINUS FIGURE. THE COURT WAS OF THE OPINION THAT THE TAX SOUGHT TO BE EVADED WILL MEAN THE TAX CHARGEABLE NOT AS IF IT WERE 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 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 SECTION 115 JB OF THE ACT. HENCE, WH EN THE COMPUTATION WAS MADE UNDER SECTION 115 JB OF THE ACT, THE AFORE SAID CONCEALMENT HAD NO ROLE TO PLAY AND WAS TOTALLY IRRELEVANT. THE REFORE, THE CONCEALMENT DID NOT LEAD TO TAX EVASION AT ALL. THE UPSHOT OF THE AFORESAID DISCUSSION WOULD BE TO SUSTAIN THE ORDER OF THE TRIBUNAL, THOUGH ON DIFFERENT GROUNDS. THEREFORE, WHILE WE DO NOT AGREE WITH THE REASONING AND APPROACH OF THE TRIBUNAL, FOR OUR REASONS DISCLOSED ABOVE, WE ARE OF THE OPINION THAT PENALTY COULD NOT HAVE BEEN IMPOSED EVEN IN RESPECT OF CLAIM OF DEPRE CIATION MADE BY THE ASSESSEE. THIS APPEAL IS ACCORDINGLY DISMISSED. ITA NO.2502/AHD/2014 5 6. AFTER GOING THROUGH ORDER OF THE LD.CIT(A) IN TH E LIGHT OF THE HONBLE DELHI HIGH COURTS DECISION, WE DO NOT FIND ANY REA SONS TO INTERFERE IN THE IMPUGNED ORDER. APPEAL OF THE REVENUE IS ACCORDING LY DISMISSED. 7. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 15 TH MAY, 2017 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER