M/s. Crown Advertising & Marketing (P) Ltd., New Delhi V. ITO, New Delhi

ITA 4322/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81714 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 29-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Keywords: Ignorance of law
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SH. I. C. SUDHIR , J M AND SH. J. S. REDDY, A M ITA NO. 4322 /DE L/2011 : ASSTT. YEAR : 2006 - 07 M/S CROWN ADVERTISING & MARKETING (P) LTD., B - 22, MAHARANI BAGH, NEW D ELHI VS INCOME TAX OFFICER, WARD - 3(4) NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAACC4193K A SSESSEE BY : SMT. INDRA BANSAL, CA REVENUE BY : SMT. PARWINDER KAUR, SR. DR DATE OF HEARIN G : 30.7 . 2014 D ATE O F PRO NOUNCEMENT : 24. 9 .2014 ORDER P ER J. S REDDY , AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 5.7.2011 FOR THE ASSESSMENT YEAR 2006 - 07. 2 . THE ASSESSEE IS A COMPANY. IT FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 ON 17.11.2006 DECLARING INCOME OF RS. 24,290/ - . ADMITTEDLY, THE ASSESSEE HAS NOT COMPUTED INCOME U/S 115JB OF THE ACT, THOUGH IT WAS LIABLE TO PAY TAX ON BOOK PROFITS. THE ASSESSING OFFICER COMPUTED BO OK PROFIT U/S 115JB AND LEVIED TAX . AS THE ASSESSEE COMPANY HAS NOT DISCLOSED ITS LIABILITY U/S 115JB OF THE ACT IN ITS RETURN OF INCOME, PE NALTY U/S 271(1)(C) WAS LEVIED . A T PARA 9, THE ASSESSING ITA NO. 4322 /DEL/201 1 CROWN ADVERTISING & MARKETING (P) LTD. 2 OFFICER REJECTED THE SUBMISSIONS FILED BY THE ASSESSEE THAT THE MISTAKE WAS BONAFIDE, INADVERTENT ETC . 3. ON APPEAL, THE FIRST APPELLATE AUTHORITY CONFIRMED THE ORDER LEVYING PENALTY BY OBSERVING AS FOLLOWS: 3.2 NOW ADVERTING TO THE PRESENT CASE OF THE APPELLANT IT IS SEEN THAT THE APPELLANT HAS NOT COMPUTED IT S BOOK PROFIT AS REQUIRED MANDATORILY U/S 115JB OF THE I. T ACT. THE APPELLANT HAS ALSO FAILED TO EVEN GET A REPORT FROM ACCOUNTANT AS REQUIRED U/S 115JB(4) OF THE ACT. THE LD. AR HAS SUBMITTED THAT THIS WAS DONE DUE TO THE IGNORANCE OF LAW. THIS CONTENTIO N OF THE APPELLANT HAS NOT ACCEPTABLE. IT IS SEEN THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT HAS BEEN AUDITED BY A QUALIFIED CA. WHO A RE SUPPOSED TO BE EXPERT IN TAX? THEREFORE, IT CANNOT BE SAID THAT THE APPELLANT COMPANY WAS NOT HAVING ASSISTANCE OF THE PROFESSIONALS. ALTHOUGH THE BOOKS OF ACCOUNTS WERE AUDITED THE CASE OF THE APPELLANT COMPANY, IT IS DIFFICULT TO BELIEVE THAT THE APPELLANT COMPANY COULD NOT HAVE G O T A REPORT FROM AN ACCOUNTANT AS REQUIRED U/S 115JB. FROM THE FACTS OF THE CA SE IT APPEARS THAT THE BOOK PRO FIT WAS NOT COMPUTED DELIBERATELY TO AVOID MAT ON THE CAPITAL GAINS. DURING THE COURSE OF ASSESSMENT, THIS FACTS WAS DETECTED BY THE A.O. WHILE COMPUTING THE PROFIT VIS - - VIS NORMAL PROFIT OF THE APPELLANT COMPANY. IT WAS NOTICED BY THE A .O THAT THE APPELLANT HAS NOT FILED ITS COMPUTATION OF BOOK PROFIT. WHEN IT HAS POINTED OUT TO THE APPELLANT COMPANY BY THE A.O THE APPELLANT MERELY AGREE D TO PAY TAX ON THE MAT PROFIT AND SUBSEQUENTLY PAID THE TAX AFTER COMPLETION OF ASSESSMENT. IT IS ALS O DIFFICULT TO BELIEVE THAT THE CA WOULD NOT HAVE ADVISED TO THE APPELLANT COMPANY ABOUT THE MANDATORY NATURE OF SECTION 115JB. IF THE MAT COMPUTATION WOULD HAVE BEEN COMPUTED U/S 115JB(2) I.E. AS PER PART II AND PART III OF SCHEDULE VI TO THE COMPANIES AC T, THEN THE INCLUSION ITA NO. 4322 /DEL/201 1 CROWN ADVERTISING & MARKETING (P) LTD. 3 OF CAPITAL GAINS F OR THE PURPOSES OF BOOK PROFIT WOULD HAVE BEEN IMMINENT. WITH THE INTENTION OF AVOIDING THE INCLUSION OF CAPITAL GAINS FOR THE PURPOSES OF BOOK PROFIT , THE APPELLANT COMPANY HAS NOT COMPUTED THE BOOK PROFIT . A S PER SECTION 115JB AS PER CLAUSE 2(B) OF PART II OF SCHEDULE VI TO THE COMPANIES ACT, CAPITAL GAINS TO THE INCLUDED FOR THE PURPOSES OF THE COMPUTATION OF BOOK PROFIT. 4 . AGGRIEVED ASSESSEE IS AN APPEAL BEFORE US . T HE LD. COUNSEL FOR THE ASSESSEE SMT. IND RA BANSAL SUBMITTED THAT THE ASSESSEE HAD COMMITTED AN INADVERTENT MISTAKE WHILE FILING ITS RETURN OF INCOME AND DUE TO THIS MISTAKE DID NOT OFFER TO TA X CAPITAL GAINS U/S 115JB OR PAID TAX ON THE SAME. SHE RELIED ON THE DECISION OF THE HON BLE SUPREME COU RT IN THE CASE OF DILIP N. SHROFF VS CIT 161 TAXMAN 221. SHE ALSO RELIED ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF CIT VS RELIANCE PETRO PRODUCTS 322 ITR 15 8 (SC) AND IN THE CASE OF PRICEWATERHOUSE COOPERS PVT. LTD VS CIT 348 ITR 306 (SC) . 5 . THE LD. DEPARTMENTAL REPRESENTATIVE SMT. PARWINDER KAUR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THIS OMISSION IS NOT AN INADVERTENT MISTAKE AND THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT BONAFIDE . SHE FURTHER RELIED ON THE DECI SION BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS ZOO M COMMUNICATION (P) LTD. 327 ITR 510 (DEL) AND ARGUED THAT THE PROPOSITION LAID DOWN IN THAT CASE ARE APPLICABLE TO THE FACTS OF THIS CASE. ITA NO. 4322 /DEL/201 1 CROWN ADVERTISING & MARKETING (P) LTD. 4 6 . RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSI DERATION OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE WE HOLD AS FOLLOWS. THE CONTENTIONS OF THE ASSESSEE BEFORE THE LD. CIT(A), WHICH IS CONTAINED IN THE LETTER DATED 14.10.2010 IS AS FOLLOWS: THUS, THE ACTION OF THE ASSESSEE IN NOT FILING OF THE RETU RN OF THE (SIC) MAT WAS DUE TO NEGLIGENCE AND IGNORANCE RATHER THA N ANY INTENTION TO CONCEAL OR UNDER STATE OF HIS (S IC ) INCOME. 7 . ADMITTEDLY, THE ASSESSEE HAS NOT TAKEN INTO ACCOUNT THE MANDATORY REQUIREMENTS OF SEC. 115JB WHILE FILING ITS RETURN OF INCOME NOR DID IT PAY TAX THEREON. IN OUR CONSIDERED VIEW THE EXPLANATION GIVEN BY THE ASSESSEE THAT IT WAS AN INADVERTENT MISTAKE CANNOT BE ACCEPT ED . THE EXPLANATION IS NOT BONAFIDE. IN FACT, THE ASSESSEE ADMITS THAT THIS LAPSE OCCURRED DUE TO NEGLIGENCE. T HUS, IN OUR VIEW THE PROPOSITIONS LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS (SUPRA) O R IN THE CASE OF PRICEW ATER HOUSE COOPERS PVT. LTD (SUPRA) A RE NOT APPLICABLE TO THE FACTS OF THIS CASE. SIMILARLY, THE OTHER CASE RELIE D UPON BY THE LD. COUNSEL OF THE ASSESSEE IS FACTUALLY DISTINGUISHABLE. THIS IS A CLEAR CASE OF FURNISHING INACCURATE PARTICULARS OF INCOME. THUS, IN OUR VIEW THE FIRST APPELLATE AUTHORITY HAS RIGHTLY CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFICER U /S 271(1)(C). WHILE COMING TO THIS DECISION, WE DRAW STRENGTH FROM THE JUDGMENT OF THE HON BLE DELHI HIGH COURT IN THE CASE OF ZOO M COMMUNICATION (P) LTD. (SUPRA) ITA NO. 4322 /DEL/201 1 CROWN ADVERTISING & MARKETING (P) LTD. 5 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COU RT ON 24 / 9 /2014. SD/ - SD/ - (I. C. SUDHIR ) ( J. S. REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 /9/ 2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE INITIAL 1. DRAFT DICTATED ON 19 .09 .2014 PS 2. DRAFT PLACED BEFORE AUTHOR 22 .09 .2014 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT CO MES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.