The ACIT, Circle-4, Baroda V. M/s. Paschim Gujarat Vij Company Ltd., Baroda

ITA 294/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5740 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 05-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA M AGARWAL
• Keywords: Depreciation
• Section: 271(1)(c); 115JB; 80IA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ I.T.A. NO. 294/AHD/2016 ( / ASSESSMENT YEAR : 2008-09) THE ACIT CIRCLE-4 BARODA / VS. PASCHIM GUJARAT VIJ COMPANY LTD. SARDAR PATEL VIDYUT BHAVAN RACE COURSE CIRCLE BARODA 390 007 ./ ./ PAN/GIR NO. : AADCP 1453 C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SMT. APARNA M. AGARWAL, CIT-DR / RESPONDENT BY : NONE / DATE OF HEARING 29/11/2018 !'# / DATE OF PRONOUNCEMENT 03/12/2018 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, VADODARA [CIT(A) IN SHORT] DATED 23/11/2015 PASSED FOR ASSESSMENT YEAR (AY) 2008-09. ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 2 - 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT L D. CIT(A) HAS ERRED IN DELETING THE PENALTY AMOUNTING TO RS.17,42,85,000/- IMPOSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS 'THE ACT'). 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 30/09/2008 DECLARING TOTAL INCOME AT RS.NIL AFTE R SET OFF OF BROUGHT FORWARD LOSSES AGAINST THE INCOME OF RS.30,75,59,02 4/-. AN ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 30/03/2014. TH E LD. ASSESSING OFFICER HAS MADE AN ADDITION OF RS.51,27,53,332/- TO THE TO TAL INCOME OF THE ASSESSEE. HOWEVER, AFTER SETTING OFF OF BROUGHT FORWARD LOSSE S AGAIN THE INCOME WAS DETERMINED AT RS.NIL. THE TAXES HAVE BEEN LEVIED UPON THE ASSESSEE ON THE BOOK PROFIT DETERMINED AT RS.1,33,82,000/- U/S.115J B OF THE ACT. THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS AGAINST THE ASSESSEE U/S.271(1)(C) OF THE ACT QUA THE ADDITION MADE AT R S.51,27,53,332/- WHICH WAS INCLUDED IN THE TOTAL INCOME DETERMINED UNDER REGUL AR PROVISIONS. HE HAS NOT INITIATED ANY PENALTY QUA (ADJUSTMENT), IF ANY, MAD E TO BOOK PROFIT FOR THE PURPOSE OF SECTION 115JB OF THE ACT. THE LD. ASSES SING OFFICER HAS LEVIED PENALTY OF RS.17,42,84,518/-. 4. DISSATISFIED WITH THE IMPOSITION OF PENALTY AT T HE END OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DELETED THE PENALTY BY PUTTING RELIANCE UPON THE OR DER OF THE LD. CIT(A)-III, BARODA IN THE CASE OF MADHYA GUJARAT VIJ COMPANY LT D. THE FINDING RECORDED BY THE LD.CIT(A) READS AS UNDER: ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 3 - 4. I HAVE CAREFULLY CONSIDERED THE FACTS ON RECORD S AND SUBMISSION OF THE LD. AUTHORIZED REPRESENTATIVE. I FIND THAT UNDER THE SI MILAR FACTS AND CIRCUMSTANCES OF THE CASE, PENALTY IMPOSED U/S. 271 (1)(C) IN THE CASE OF MADHYA GUJARAT VIJ COMPANY LTD., THE GROUP COMPANY OF THE APPELLANT, FOR A.Y. 2008-09 HAS BEEN DELETED BY THE CIT(A)-III, BA RODA VIDE HIS ORDER CONTAINED IN APPEAL NO. CAB/III-156/13-14 DATED 29. 09.2014. THE FINDINGS AS RECORDED IN PARA-4.3 TO 4.3.1. BY THE CIT(A)-III, B ARODA ARE REPRODUCED AS UNDER:- 4.3. I HAVE CONSIDERED THE FACTS OF T HE CASE, THE AO'S OBSERVATIONS AND SUBMISSION MADE BY THE AR OF THE A PPELLANT. THE ITAT AHMEDABAD BENCH IN ITS DECISION IN THE CASE OF VIJAY MISTRY CONSTRUCTION AND RAJKAMAL BUILDERS PVT. LTD. 20 TAXMAN.COM 352 ( AHD) HAS HELD THAT WHERE THE INCOME WAS FINALLY COMPUTED U/S.115JB OF THE ACT AND THERE IS NO EFFECT OF ANY OMISSION OF THE ITEM NOT ALLOWABLE AS EXPENDITURE ON THE INCOME COMPUTED U/S 115JB OF THE ACT, PENALTY U/S 271(1)(C ) CANNOT BE LEVIED. IN THAT CASE, THE INCOME HAD BEEN FINALLY COMPUTED U/S 115JB AND THE DISALLOWANCE MADE WHILE COMPUTING RELIEF U/S 80IA H AD NO EFFECT ON SUCH INCOME COMPUTED U/S.115JB. THIS DECISION WAS UPHEL D BY THE HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO. 2224 OF 2009 VIDE ORDER DATED 29.08.2011. THIS DECISION OF THE HIGH COURT HAS BEE N RELIED UPON BY GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE FERTILIZERS AND CHEMICAL LTD. REPORTED IN 36 TAXMAN.COM 533 (GUJ) AND AGAIN SIMILAR DECISION WAS GIVEN. IT MAY BE MENTIONED HERE THAT THE ITAT IN IT S DECISION IN THE CASE OF GUJARAT STATE FERTILIZER AND CHEMICALS LTD. (SUPRA) HAD RELIED UPON THE DECISION OF DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. 327 ITR 543 (DEL.). THE SLP FILED AGAINST THIS DECISION OF DELHI HIGH C OURT HAS BEEN REJECTED BY THE APEX COURT IN ITS DECISION REP ORTED IN 21 TAXMAN.COM 184 (SC). THE HIGH COURT IN ITS DECISION IN THE CAS E OF NALWA SONS INVESTMENTS LTD. HAD HELD THAT WHERE THE ASSESSMENT WAS MADE ON INCOME COMPUTED U/S 115JB AND TAX HAS BEEN PAID ON INCOME SO COMPUTED, PENALTY U/S 271(1)(C) WOULD NOT BE IMPOSED WITH RESPECT TO THE ADDITIONS THAT WOULD HAVE BEEN MADE TAKING INTO ACCOUNT CONCEALMENT MADE BY THE ASSESSEE WHILE MAKING ASSESSMENT UNDER NORMAL PROCEDURE. 4.3.1. IN THE PRESENT CASE ALSO, THE FINAL INCOME HAS BEEN COMPUTED U/S 115JB OF THE ACT. THE ADDITION MADE TO THE INCOME C OMPUTED UNDER NORMAL PROCEDURE AND IN RESPECT OF WHICH PENALTY PROCEEDIN GS HAVE BEEN INITIATED HAS NOT BEEN MADE TO THE INCOME AS PER SECTION 115J B. HENCE, AS PER RATIO ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 4 - LAID DOWN BY THE MENTIONED DECISIONS, NO PENALTY U/ S 271(1)(C) CAN BE LEVIED IN THIS CASE. ACCORDINGLY, THE PENALTY LEVIED BY TH E AO IS DIRECTED TO BE DELETED. 4.1. SINCE THE FACTS IN THIS CASE ARE IDENTICAL AS THE TOTAL INCOME HAD BEEN FINALLY ASSESSED U/S. 115JB AND THE DISALLOWANCE OF THE DEPRECIATION MADE BY THE ASSESSING OFFICER HAD NO EFFECT ON THE INCOME C OMPUTED U/S. 115JB, I RESPECTFULLY FOLLOWING THE ORDER OF CIT(A)-III, BAR ODA, HOLD THAT PENALTY U/S. 271(1)(C) CANNOT BE LEVIED, IF INCOME IS FINALLY CO MPUTED U/S. 115JB. ACCORDINGLY, GROUND NO. 1.1 IS ALLOWED IN THE FAVOU R OF APPELLANT AND THE PENALTY IS DIRECTED TO BE CANCELLED. 5. WITH THE ASSISTANCE OF LD. DEPARTMENTAL REPRESEN TATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. IT HAS BEEN BROUGHT TO OUR NOTICE THAT QUANTUM APPEAL BEARING NO.1710/AHD/2012 IS PENDING FOR ADJU DICATION AND FIXED FOR HEARING ON 13.12.2018. IT IS PERTINENT TO OBSERVE THAT WHEN QUANTUM APPEAL REMAINS PENDING, THEN PENALTY APPEALS ARE NOT REQUI RED TO BE DECIDED BECAUSE ULTIMATELY COMPUTATION OF PENALTY IS ALWAYS DEPENDE NT UPON THE QUANTUM APPEAL. IT IS PERTINENT TO NOTE THAT SUB-CLAUSE(II I) TO SECTION 271(1)(C) PROVIDES A MECHANISM FOR COMPUTATION OF PENALTY. IT CONTEMP LATES THAT IN THE CASES REFERRED TO IN CLAUSE(C), ASSESSEE WOULD BE REQUIRE D TO PAY IN ADDITION TO TAX, IF ANY, PAYABLE BY AN ASSESSEE, THEN A SUM WHICH SHALL NOT BE LESS THAN, BUT WHICH SHALL NOT EXCEED (THREE TIMES), THE AMOUNT OF TAXES SOUGHT TO BE EVADED BY REASON OF CONCEALMENT OR FURNISH INACCURATE PARTICU LARS OF SUCH INCOME. IN OTHER WORDS, THE ADDITIONS MADE TO THE INCOME OF TH E ASSESSEE WHICH IS THE AMOUNT, REQUIRED TO BE CONSIDERED FOR CALCULATION OF THE PENALTY. IN THE PRESENT CASE, ULTIMATE TAXES HAVE BEEN LEVIED UPON THE ASSESSEE ON THE BASIS OF BOOK PROFIT CALCULATED U/S.115JB OF THE ACT. HENCE , ADDITION/DELETION TO THE ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 5 - INCOME OF THE ASSESSEE UNDER REGULAR PROVISION HAS NO BEARING ON TAXABILITY OF THE ASSESSEE. THE CASE OF THE ASSESSEE IS FULLY CO VERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. REPORTED IN 327 ITR 543 (DEL.). THE CBDT HAS ACCEPTED THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTME NTS LTD. AND ISSUED A CIRCULAR BEARING NO.25 OF 2015. THIS CIRCULAR HAS DIRECT BEARING IN THE CONTROVERSY IN HAND, THEREFORE IT IS IMPERATIVE UPO N US TO TAKE NOTE OF THIS CIRCULAR WHICH READS AS UNDER:- CIRCULAR NO. 25/2015 F.NO.279/MISC./140/2015/ITJ GOVERNMENT OF INDIA MINISTRY OF FINANCE CENTRAL BOARD OF DIRECT TAXES NEW DELHI. 31 ST DECEMBER, 2015 SUBJECT: PENALTY U/S 271(L)(C) WHEREIN ADDITIONS/D ISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 BUT T AX LEVIED UNDER MAT PROVISIONS U/S 115JB/115JC, FOR CASES PRIOR TO A.Y. 2016-17-REG.- SECTION 115.IB OF THE ACT IS A SPECIAL PROVISION FO R LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES, INSERTED BY FINANCE ACT 2000 WITH EFF ECT FROM 1-4-2001. 2. UNDER CLAUSE (III) OF SUB-SECTION (1) OF SECTION 271 OF THE ACT, PENALTY FOR CONCEALMENT OF INCOME OR FURNISHING INACCURATE PART ICULARS OF INCOME IS DETERMINED BASED ON THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' WHICH HAS BEEN DEFINED INLER-ALIA, AS THE DIFFERENCE BETWEEN THE TAX DUE ON THE INCOME ASSESSED AND THE TAX WHICH WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BE EN REDUCED BY THE AMOUNT OF CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INAC CURATE PARTICULARS HAD BEEN FILED. 3. IN THIS CONTEXT, HON'BLE DELHI HIGH COURT IN ITS JUDGMENT DATED 26.8.2010 IN ITA NO. 1420 OF 2009 IN THE CASE OF NALWA SONS INVESTME NT LTD. (AVAILABLE IN NJRS AS ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 6 - 2010-LL-0826-2), HELD THAT WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE IS LESS THAN THE TAX PAYABLE UNDER THE DE EMING PROVISIONS OF SECTION 115JB OF THE ACT, THEN PENALTY UNDER SECTION 271(I)(C) OF THE ACT COULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NO RMAL PROVISIONS. THE JUDGMENT HAS ATTAINED FINALITY. 4. SUBSEQUENTLY, THE PROVISIONS OF EXPLANATION 4 T O SUB-SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FINANCE ACT, 2015, WHICH PROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOUGHT TO BE EVADED F OR SITUATIONS EVEN WHERE THE INCOME DETERMINED UNDER THE GENERAL PROVISIONS IS L ESS THAN THE INCOME DECLARED FOR THE PURPOSE OF MAT U/S 115JB OF THE ACT. THE SUBSTI TUTED EXPLANATION 4 IS APPLICABLE PROSPECTIVELY W.E.F. 01.04.2016. 5. ACCORDINGLY, IN VIEW OF THE DELHI HIGH COURT JUD GMENT AND SUBSTITUTION OF EXPLANATION 4 OF SECTION 271 OF THE ACT WITH PROSPE CTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 1/4/2016, WHERE THE INCOME T AX 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 1 15JB OF THE ACT, THEN PENALTY UN DER 271 (1 )(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS /DISALLOWANCE S MADE UNDER NORMAL PROVISIONS. IT IS FURTHER CLARIFIED THAT IN CASES PRIOR TO 1.4.201 6, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT. THEN THE LE VY OF PENALTY U/S 271(1 )(C) OF THE ACT. WILL DEPEND ON THE NATURE OF ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLOWED I N RESPECT OF SECTION 115JC OF THE ACT ALSO. 7. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT NO APPEALS MAY HENCEFORTH BE FILED ON THIS GROUND AND APPEALS ALREADY FILED, IF ANY, ON T HIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESSED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. (RAMANJIT KAUR SETHI) DCIT (OSD) (ITJ), CBDT, NEW DELHI ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 7 - 6. SINCE IN THE PRESENT CASE PENALTY HAS NOT BEEN I MPOSED UPON THE ASSESSEE QUA ANY ADJUSTMENT MADE TO THE BOOK PROFIT U/S.115JB OF THE ACT. THE PENALTY SOUGHT TO BE IMPOSED ON THE ADDITIONS MADE WHILE DETERMINING THE INCOME OF THE ASSESSEE UNDER REGULAR PROVISION. DU E TO THIS REASON, WE ARE OF THE VIEW THAT QUANTUM APPEAL HAS NO BEARING ON ADJU DICATION OF THIS APPEAL AND, THEREFORE, THERE IS NO NECESSITY PRE-RESOLUTIO N OF QUANTUM APPEAL FOR DECIDING THE PRESENT APPEAL. THE PENALTY IS NOT IM POSABLE UPON THE ASSESSEE IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF NALWA SONS INVESTMENTS LTD. (SUPRA) WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT AND A CIRCULAR HAS BEEN ISSUED TO THAT EFFECT. THE LD. F IRST APPELLATE AUTHORITY HAS FOLLOWED THE DECISION OF NALWA SONS INVESTMENTS LT D.(SUPRA) AND, THEREFORE, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVE NUE, IT IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON 3 RD DECEMBER-2018 AT AHMEDABAD. -SD- - SD- ( AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 03/12/2018 &.., .(../ T.C. NAIR, SR. PS ITA NO. 294/AHD /2016 DCIT VS. PASCHIM GUJARAT VIJ COMPANY LTD. ASST.YEAR 2008-09 - 8 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-2, VADODARA 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 30.11.2018 (DICTATION-PAD 1 2- PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 30.11.2018 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05/12/2018 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER