ACIT, New Delhi V. M/s. Ortel Communication Ltd., New Delhi

ITA 5364/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90858 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 17-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAMKANJU NA
• Assessee Lawyers: MANOJ G UPTAF
• Section: 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI N.K. SAINI AND SHRI I.C. SUDHIR ITA NO. 5364/DEL/2013 ASSESSMENT YEAR: 2007-08 ASSISTANT CIT, VS. M/S. ORTEL COMMUNIC ATION LTD., CIRCLE 13(1), B-7/122-A , SAFDARJUNG ENCL AVE, NEW DELHI. NEW DELHI. (PAN: AAACO1004B) (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI MANOJ G UPTA,F CA DEPARTMENT BY: SHRI P. DAMKANJU NA, SR. DR DATE OF HEARING : 17.02.2015 DATE OF PRONOUNCEMENT: 16.04.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER WH EREBY THE LEARNED CIT(APPEALS) HAS DELETED THE PENALTY LEVIED UNDER S EC. 271(1)(C) OF THE INCOME-TAX ACT, 1961 AT RS.15,03,986. AT THE OUTSET OF HEARING, THE LEARNED AR POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT CASE IS FULLY COVERED BY THE DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH C OURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. (2010) 327 ITR 54 3 (DEL.) WHEREIN ALSO THE TOTAL INCOME COMPUTED UNDER REGULAR PROVISIONS WAS LESS THAN BOOK PROFITS, THE HON'BLE HIGH COURT WAS PLEASED TO HOLD THAT PENALTY UNDER SEC. 2 271(1)(C) CANNOT BE LEVIED ON THE ASSESSMENT MADE U NDER SEC. 115JB OF THE INCOME-TAX ACT, 1961. 2. THE LEARNED DR ON THE OTHER HAND PLACED RELIANCE ON THE PENALTY ORDER WITH THIS CONTENTION THAT THERE WAS CONCEALME NT OF PARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS THEREO F ON THE PART OF THE ASSESSEE AND THUS THE ASSESSING OFFICER WAS JUSTIFI ED IN IMPOSING PENALTY ON THE DISALLOWANCE OF FIXED ASSETS WRITTEN OFF AT RS. 44,68,170. 3. IN REJOINDER, THE LEARNED AR SUBMITTED THAT THER E IS NO DISPUTE THAT BOOKS OF ACCOUNT AND FINANCIAL STATEMENTS WERE PREP ARED BY THE ASSESSEE COMPANY IN ACCORDANCE WITH THE PROVISIONS OF COMPAN IES ACT, 1956 READ WITH ACCOUNTING STANDARDS PRESCRIBED BY THE ICAI AN D WERE ALSO AUDITED UNDER THE COMPANIES ACT AS WELL AS TAX AUDIT WAS CO NDUCTED UNDER THE INCOME-TAX ACT, 1961. HE SUBMITTED THAT IN THE PROF IT AND LOSS ACCOUNT PREPARED BY THE ASSESSEE COMPANY IN SCHEDULE XIV, I T HAD CLEARLY AND UNAMBIGUOUSLY SEPARATELY DISCLOSED FIXED ASSETS WR ITTEN OFF RS.44,68,170 PREDOMINANTLY ESTABLISHED THAT THERE WAS NEITHER AN Y INTENTION TO CONCEAL THE INCOME NOR ANY CONCEALMENT OR INACCURATE PARTICULAR S OF INCOME WERE FURNISHED. THUS IT IS NOT A CASE OF CONCEALMENT OF PARTICULARS OF INCOME OR 3 FURNISHING INACCURATE PARTICULARS THEREOF ON THE PA RT OF THE ASSESSEE. THE LEARNED CIT(APPEALS) WAS THUS JUSTIFIED IN DELETING THE PENALTY. 4. HAVING GONE THROUGH THE ABOVE CITED DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD. (SUPRA), WE FIND THAT IN THAT CASE THE HON'BLE HIGH COURT HAS BEEN PLEASED TO HOLD THAT WHERE THE INCOME COMP UTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN THE INCOME D ETERMINED BY LEGAL FICTION, NAMELY, THE BOOK PROFITS UNDER SEC. 115JB OF THE ACT AND THE INCOME OF THE ASSESSEE IS ASSESSED UNDER SEC. 115JB OF THE ACT AND NOT UNDER THE NORMAL PROVISIONS, THE TAX IS PAID ON THE INCOME AS SESSED UNDER SEC. 115JB OF THE ACT, CONCEALMENT OF INCOME WOULD HAVE NO ROL E TO PLAY AND WOULD NOT LEAD TO TAX EVASION, THEREFORE, PENALTY CANNOT BE I MPOSED ON THE BASIS OF THE DISALLOWANCES OR ADDITIONS MADE UNDER THE REGULAR P ROVISIONS. SIMILAR ARE THE FACTS OF THE PRESENT CASE BEFORE US, HENCE, RES PECTFULLY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. NALWA SONS INVESTMENTS LTD.(SUPRA), WE HOLD THAT TH E LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE PENALTY LEVIED ON THE BASIS OF ASSESSMENT FRAMED UNDER NORMAL PROVISIONS KEEPING IN MIND THAT INCOME COMPUTED IN ACCORDANCE WITH THE NORMAL PROCEDURE IS LESS THAN T HE INCOME DETERMINED 4 UNDER SEC. 115JB OF THE ACT. THE FIRST APPELLATE OR DER IN THIS REGARD IS THUS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 5. IN RESULT, THE APPEAL IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 16 .04.20 15 SD/- SD/- ( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 /04/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR DATE DRAFT DICTATED ON COMPUTER 15.04.2015 DRAFT PLACED BEFORE AUTHOR 15.04.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 16.04.2015 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 16.04 .2016 APPROVED DRAFT COMES TO THE SR.PS/PS 16.04.2015 KEPT FOR PRONOUNCEMENT ON 16.04.2015 FILE SENT TO THE BENCH CLERK 16.04.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.