N Steel Pvt. Ltd, Mehsana V. ITO, Ward-3(1)(1), Ahmedabad

ITA 503/AHD/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8372 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-10-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 05-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANTOSH KARNANI
• Assessee Lawyers: A S CHHAJAD
• Section: 271(1)(c); 115JB

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO. 503/AHD/2018 / ASSESSMENT YEAR: 2013-14 N STEEL P.LTD. PLOT NO.79 NIRMAL INDUSTRIAL PARK GIDC, GOZARIA 382 825 TAL.VIJAYPUR, DIST. MEHSANA PAN : AADCN 0075 E VS ITO, WARD-3(1)(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI A.S. CHHAJAD, AR REVENUE BY : SHRI SANTOSH KARNANI, SR.DR / DATE OF HEARING : 09/10/2019 /DATE OF PRONOUNCEMENT : 10 / 10/2019 O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- 9, AHMEDABAD DATED 9.2.2018 PASSED FOR THE ASSTT.YEAR 2013-14. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING LEVY OF PENALTY AMOUNTING TO RS.5,45,000 /- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED RETURN OF INCOME ELECTRONICALLY ON 28.9.2013 DECLARING TOTAL INCOME OF ITA NO.503/AHD/2018 - 2 - RS.16,25,354/- BEFORE SET OFF PREVIOUS YEARS LOSS. IT EMERGES OUT THAT THE LD.AO HAS PASSED THE ASSESSMENT ORDER ON 22.12.2015 . HE MADE DISALLOWANCE OUT OF EXPENSES AT RS.18,32,829/-. SI NCE THERE WAS BROUGHT FORWARD LOSS OF RS.34,58,183/- THE INCOME OF THE AS SESSEE WAS DETERMINED AT NIL. THE ASSESSEE HAS SHOWN BOOK PRO FIT COMPUTED UNDER SECTION 115JB. NO ADJUSTMENT WAS MADE ON ACC OUNT OF ANY DISALLOWANCE MADE UNDER THE REGULAR PROVISIONS OF T HE ACT. THUS, BOOK PROFIT SHOWN BY THE ASSESSEE HAS BEEN ACCEPTED AS I T IS. ULTIMATE TAX DEMAND WAS RAISED ON THE BASIS OF BOOK PROFIT COMPU TED BY THE ASSESSEE. AT THE VERY OUTSET, THE LD.COUNSEL FOR T HE ASSESSEE SUBMITTED THAT SINCE TAXES HAVE BEEN LEVIED UPON THE ASSESSEE ON THE BASIS OF THE BOOK PROFIT, THEREFORE, IT DOES NOT DESERVES TO BE VISITED WITH THE PENALTY ON THE ITEMS, WHICH WERE ADDED WHILE DETERMINING TH E INCOME OF THE ASSESSEE UNDER REGULAR PROVISIONS. HE FURTHER CONT ENDED THAT ASSESSMENT YEAR IN THE PRESENT CASE IS 2013-14 AND CIRCULAR ISSUED BY THE CBDT BEARING NO.25 OF 2015 IS DULY APPLICABLE. HE HAS PLACED ON RECORD COPY OF THE ABOVE CIRCULAR, WHICH READS AS UNDER: NEW DELHI, 31 ST DECEMBER, 2015 SUBJECT: PENALTY U/S 271(L)(C) WHEREIN ADDITION S/DISALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 BUT TAX LEVIED UNDER MAT PROVISIONS U/S 115JB/115JC, FOR CASES PRIOR TO A.Y. 2016-17- REG.- SECTION 115JB OF THE ACT IS A SPECIAL PROVISION FOR LEVY OF MINIMUM ALTERNATE TAX ON COMPANIES, INSERTED BY FIN ANCE ACT 2000 WITH EFFECT 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 PARTICULARS OF INCOME IS DETERMINED BASED ON THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' WHICH HAS BEEN DEFINED INTER-ALIA, AS THE DIFFERENCE BETW EEN THE TAX DUE ON THE ITA NO.503/AHD/2018 - 3 - INCOME ASSESSED AND THE TAX WHICH WOULD HAVE BEEN C HARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF CONCEALE D INCOME OR INCOME IN RESPECT OF WHICH INACCURATE 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 NA LWA SONS INVESTMENT LTD. (AVAILABLE IN NJRS AS 2010-LL-0826-2), HELD THA T WHEN THE TAX PAYABLE ON INCOME COMPUTED UNDER NORMAL PROCEDURE I S LESS THAN THE TAX PAYABLE UNDER THE DEEMING PROVISIONS OF SECTION 115 .IB OF THE ACT, THEN PENALTY UNDER SECTION 271(L)(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 TO SUB-SECTION (1) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FIN ANCE ACT, 2015, WHICH PROVIDE FOR THE METHOD OF CALCULATING THE AMOUNT OF TAX SOUGHT TO BE EVADED FOR SITUATIONS EVEN WHERE THE INCOME DETERMI NED UNDER THE GENERAL PROVISIONS IS LESS THAN THE INCOME DECLARED FOR THE PURPOSE OF MAT U/S 115IB OF THE ACT. THE SUBSTITUTED EXPLANATI ON 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 PROSPECTIVE EFFECT, IT IS NOW A SETTLED POSITION THAT PRIOR TO 1/4/2016, WHERE THE INCOME TAX PAYABLE ON THE TOTAL INCOME AS COMPUTED UNDER T HE NORMAL PROVISIONS OF THE ACT IS LESS THAN THE TAX PAYABLE ON THE BOOK PROFITS U/S 115JB OF THE ACT, THEN PENALTY UNDER 271(L)(C) OF THE ACT, IS NOT ATTRACTED WITH REFERENCE TO ADDITIONS /DISALLOWANCES MADE UNDER NO RMAL PROVISIONS. IT IS FURTHER CLARIFIED THAT IN CASES PRIOR TO 1.4.2016, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE PURPOSE OF MAT, THEN THE LEVY OF PENALTY U/S 271(L)(C) OF THE ACT, WILL DEPEND ON THE NATURE O F ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLO WED IN RESPECT OF SECTION 115JC OF THE ACT ALSO. 7. ACCORDINGLY, THE BOARD HEREBY DIRECTS THAT NO AP PEALS MAY HENCEFORTH BE FILED ON THIS GROUND AND APPEALS ALREADY FILED, IF ANY, ON THIS ISSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NO T PRESSED UPON. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERNED. ITA NO.503/AHD/2018 - 4 - 4. SINCE THE ASSESSMENT YEAR INVOLVED BEFORE US, IS 2013-14, ISSUE IS SQUARELY COVERED BY THE ABOVE CIRCULAR, AND THEREFO RE, THE APPEAL OF THE ASSESSEE IS ALLOWED AND IMPUGNED PENALTY IS CANCELL ED. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2019. SD/- SD/- (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER