ZORA PHARMA LTD., Ahmedabad V. The ACIT, CIRCLE-8, Ahmedabad

ITA 557/AHD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80415 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-10-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 04-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: M G PATEL
• Keywords: Deemed to accrue or arise in india
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI N.S. SAINI , ACCOUNTANT MEMBER ITA NO . 557 /AHD/20 1 3 A. Y. 1998 - 99 ZORA PHARMA LTD., 604 - ANIKET, C.G. ROAD, NAVRANGPURA, AHMEDABAD. PAN: AAAC Z 1017D VS ACIT, CIRCLE - 8, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M.K. SINGH , SR. D.R. , ASSESSEE(S) BY : SHRI M.G. PATEL, A.R. / DATE OF HEARING : 1 4 / 10 /201 4 / DATE OF PRONOUNCEMENT: 17 / 10 /201 4 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN A PPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF TH E L EARNED CIT (A ) - XIV , AHMEDABAD , DAT ED 14 / 01 /201 1 FOR A.Y.1998 - 99 AND THE ONLY ISSUE IS IN RESPECT OF PENALTY LEVIED U/S.271(1)(C) OF RS.5,24,221/ - WHICH WAS CONFIRMED BY LEARNED CIT(A). FURTHER AN ADDITIONAL GROUND HAS ALSO BEEN RAISED ON THE LEGAL POINT THAT THE TAX WAS LEVIED ON THE BASIS OF BOOK PROFIT U/S.115JA OF RS.45,73,013/ - AS SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME ; THEREFORE , THE PENALTY U/S.271(1)(C) WAS WRONGLY LEVIED. 2. WE HAVE HEARD BOTH THE SIDES. LEARNED AR HAS PLACED RELIANCE UP ON AN ORDER OF HON BLE GUJARAT HIGH COURT PRONOUNCED IN THE CASE OF CIT VS. CIT VS. C ITI TILES LTD. (TAX APPEAL NOS.140 OF 2014 & 141 OF 2014) ORDER DATED 23 RD OF APRIL, 2014 , WHEREIN A DECISION OF DELHI HIGH ITA NO. 557 /AHD/ 201 3 ZORA PHARMA LTD. VS. ACIT, CIRCLE - 8 , AHMEDABAD . FOR A.Y. 1998 - 99 - 2 COURT PRONOUNCED IN THE CASE OF CIT VS. NAL W A SON S INVESTMENTS, (2010) 45 D TR 3 45 (DELHI) HAS BEEN CONSIDERED AND THEREAFTER HELD AS UNDER: IN THE PRESENT CASE, WE SHALL HAVE TO PROCEED ON THE BASIS THAT THE ORDER OF COMMISSIONER HAS BECOME FINAL. IT IS, THUS, BINDING BOTH ON THE REVENUE AS WELL AS THE ASSESSEE. SUCH ORDER IN EFFECT WAS THAT ADDITION FOR NORMAL COMPUTATION SUSTAINED, FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT DELETED. THE RESULT OF THIS DECISION OF THE COMMISSIONER WOULD BE THAT THE TAX THAT THE ASSESSEE WOULD PAY BEFORE AND AFTER AD DITIONS WOULD REMAIN EXACTLY THE SAME. IN OTHER WORDS, SINCE THE COMMISSIONER DID NOT PERMIT ANY INCREASE IN THE ASSESSEE F S BOOK PROFIT COMPUTATION UNDER SECTION 115JB OF THE ACT, EVEN AFTER UNEARTHING THE CONCEALED INCOME, THE ASSESSEE ENDED UP PAYING THE SAME AMOUNT OF MINIMUM ALTERNATIVE TAX UNDER SECTION 115JB OF THE ACT EVEN AFTER THE CONCEALMENTS WERE UNEARTHED AND ACCEPTED BY THE ASSESSEE. IT IS IN THIS BACKGROUND, OUR DISCUSSION ON THE IMPLICATION OF EXPLANATION 4 TO SECTION 271(1) OF THE ACT MUST B E SEEN. WHEN IN FACTS OF THE CASE, THE ASSESSEE'S TAX LIABILITY DID NOT CHANGE DESPITE UNEARTHING OF CONCEALED INCOME, NO PENALTY COULD HAVE BEEN LEVIED. WE MAY CLARIFY THAT OUR CONCLUSIONS SHOULD NOT BE SEEN AS LAYING DOWN, THAT SIMPLY BECAUSE BEFORE AND AFTER THE ADDITIONS THE ASSESSEE REMAINED A MAT COMPANY AND PAID TAX UNDER SECTION 115JB OF THE ACT OR SUCH SIMILAR PROVISION, THAT BY ITSELF WOULD MEAN THAT NO PENALTY COULD BE IMPOSED. IF THE EFFECT OF THE ADDITION OF THE CONCEALED INCOME RESULTS INTO HI GHER MINIMUM ALTERNATIVE TAX BY INCREASING THE BOOK PROFIT ALSO, PENALTY COULD AS WELL BE IMPOSED. WITH THIS CLARIFICATION, WE ANSWER THE QUESTION AGAINST THE REVENUE. 3. ON THE OTHER HAND, FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R. HAS SUPPORTED TH E ACTION OF THE REVENUE DEPARTMENT. THE ADMITTED FACTUAL POSITION IS THAT VIDE AN ORDER U/S.143(3) R.W.S. 254 OF IT ACT DATED 7.12.2010 THE INCOME WAS FINALLY COMPUTED BY THE AO AS UNDER: 8. AFTER DISCUSSION AND TAKING INTO ACCOUNT THE DIRECTION OF THE ITAT THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: TOTAL LOSS AS PER ORDER GIVING APPEAL EFFECT TO THE ORDER OF THE HON'BLE - ITAT DATED 24 - 08 - 2009 RS. 708135/ - LESS: AS PARA 6 RS. 102000/ - TOTAL ASSESSED L OSS RS.810135/ - 9. COMPUTATION OF SEC.115JA DEEMED INCOME U/S.L 15JA VIDE ORDER GIVING EFFECT TO ITAT'S ORDER DATED 24 - 08 - 2009 RS.1371903/ - ITA NO. 557 /AHD/ 201 3 ZORA PHARMA LTD. VS. ACIT, CIRCLE - 8 , AHMEDABAD . FOR A.Y. 1998 - 99 - 3 SINCE THERE IS LOSS OF RS.810135/ - UNDER NORMAL PROVISIONS OF THE ACT, THE ASSESSEE IS LIABLE TO PAY TAX ON THE DEEMED INCOME U/S. 115 JA OF THE ACT. 4. FURTHER , WE HAVE ALSO EXAMIEND THAT AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE THE FIGURE OF THE BOOK PROFIT AS PER THE CALCULATION MADE U/S.115JA WAS RS.45,73,013/ - AND THE 30% OF THE SAME W AS COMPUTED AT RS.13,71,904/ - WHICH WAS FINALLY ASSESSED AS SEEN ABOVE. BECAUSE OF THESE REASONS , WE HEREBY H O LD THAT THE ISSUE OF LEVY OF CONCEALMENT PENALTY IS SQUARELY COVERED BY THE AFORECITED DECISIONS IN FAVOUR OF THE ASSESSEE; HENCE, WE HEREBY REVER SE THE FINDINGS OF THE REVENUE S AUTHORITIES AND DIRECTED TO DELETE THE PENALTY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( N.S. SAINI ) ( MUKUL KR. SHRAWAT ) ACCOUNT ANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17 / 10 / 20 1 4 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELL ANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD