DCIT 5(2), MUMBAI V. JET AIRWAYS (I) LTD, MUMBAI

ITA 6597/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8468 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 05-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIJAYA MEHTA
• Keywords: Bonafide belief; Retrospective amendment; Bad and doubtful debts
• Section: 43B; 143(3); 115JB; 148

Judgement Text

, TS TSTS TS INCOME TAX APPELLATE TRIBUNAL,MUMBAI - J BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBE R & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.6596/MUM/2014, /ASSESSMENT YEAR-2003-04 JET AIRWAYS (INDIA) LTD. SIROYA CENTRE, SAHAR AIRPORT ROAD, ANDHERI (E), MUMBAI-400099. PAN: AAACJ0920H VS. DCIT-5(2) AAYAKAR BHAVAN, MUMBAI-400020 ( / APPELLANT) ( / RESPONDENT) /.ITA NO.6597/MUM/2014, /ASSESSMENT YEAR-2007-08 DCIT-5(2) AAYAKAR BHAVAN, MUMBAI-400020 VS. JET AIRWAYS (INDIA) LTD. SIROYA CENTRE, SAHAR AIRPORT ROAD, ANDHERI (E), MUMBAI-400099. PAN: AAACJ0920H ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : MS ANU KRISHNA AGGARWAL W ITH ALOK JOHRI (DR) ! ! / ASSESSEE BY : SHRI VIJAYA MEHTA (AR) ' ! / DATE OF HEARING : 05 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 01 -02-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THESE TWO APPEALS BY ASSESSEE U/S 253 OF THE INCOME TAX ACT (THE ACT) ARE DIRECTED AGAINST THE SEPARATE ORDERS OF EVEN DAY OF LD. CIT( A)-9, MUMBAI DATED 28.08.2014 FOR ASSESSMENT YEARS (AYS) 2003-04 & 2007-08. 2. IN ITA NO. 6896/MUM/2014, THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL: GROUND NO. 1: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HON'BLE CIT(A) ERRED IN UPHOLDING THE PENALTY LEVIED UNDER SECTION 271(1 )(C) OF THE ACT BY THE LEARNED A.O. OF RS.50,23,693/- IN RESPECT OF DISALLOWANCE O F PAYMENT OF BONUS TO EX- EMPLOYEES AMOUNTING TO RS.1,67,45,643/- UNDER SECTI ON 43B OF THE ACT . GROUND NO. 2: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HON'BLE CIT(A) ERRED IN UPHOLDING THE PENALTY LEVIED UNDER SECTION 271(1 )(C) OF THE ACT BY THE LEARNED A.O. OF RS.10,880/- IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF SALE OF SCRAP NOT CONSIDERED AS INCOME AMOUNTING TO RS.36,267/-. 3. BRIEF FACTS RELATED WITH THE GROUNDS OF APPEAL BEFO RE US ARE THAT FOR THE ASSESSMENT U/S 143(3) OF THE ACT FOR AY 2003-04 WAS COMPLETED ON 1 0.03.2006. SUBSEQUENTLY, THE 2 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . ASSESSMENT WAS RE-OPENED BY ISSUING NOTICE U/S 148 ON 31.03.2010 AND THE ASSESSMENT U/S 143(3) R.W.S. 147 WAS COMPLETED ON 24.12.2010. THE CASE OF WAS RE-OPENED ON THE BASIS OF SPECIAL AUDITORS REPORT WHEREIN IT WAS POINTED OUT THAT THE ASSESSEE HAD ISSUED CHEQUE TO EX-EMPLOYEES TO AVOID THE DISALLOWANCE U/S 43B J UST BEFORE FILING OF RETURN OF INCOME. THE ASSESSING OFFICER (AO) IN RE-ASSESSMENT PROCEED INGS MADE THE DISALLOWANCE U/S 43B OF RS. 1,69,00,000/- AND ADDITION ON SALE OF SCRAP OF RS. 36,267/-. NO APPEAL WAS FILED IN RESPECT OF ADDITION ON ACCOUNT OF SALE OF SCRAP. ON APPEAL BEFORE LD CIT(A) THE DISALLOWANCE U/S 43B. THE LD CIT(A) SUSTAINED THE D ISALLOWANCE U/S 43B OF RS. 1,67,45,647/- HOLDING THAT ASSESSEE SUBMITTED THE EVIDENCE IN RESPECT OF BONUS PAYMENT TO ITS EMPLOYEE OF RS. 1,54,357/-. NO FURTHER APPE AL WAS FILED BY ASSESSEE BEFORE THE TRIBUNAL. THE AO ISSUED NOTICE U/S 274 RWS 271(1)(C ) DATED 25.11.2013 FOR LEVY OF PENALTY. THE ASSESSEE CONTESTED THE PENALTY NOTICE AND CONTENDED THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. THE ASSESSEE MADE FULL DISCLOSURE OF FACT AND THERE WAS A REASON ABLE CAUSE/BELIEF FOR PROVISION OF SECTION 43B OF THE ACT. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY AO AND LEVIED THE PENALTY OF RS. 50,34,753/- VIDE ORDER DATED 29.11.2 013. THE AO LEVIED THE PENALTY HOLDING THAT THE ASSESSEE FAILED TO PROVE ITS CLAIM AND THE ADDITIONS HAVE BECAME FINAL IN THE QUANTUM PROCEEDING. THE PENALTY WAS LEVIED FOR FURN ISHING OF INACCURATE PARTICULARS OF INCOME. ON APPEAL BEFORE THE LD. CIT(A), THE PENALT Y WAS CONFIRMED. FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARGUED THAT THE YEAR INVOLVED IN THE APPEAL IS FINANCIAL YEAR (FY) 2002-03 OF WHICH THESE TRANSACTIONS PERTA IN. THE ASSESSEE FILED RETURN OF INCOME ON THE BASIS OF AUDIT REPORT WHICH HAS BEEN GIVEN BY AUDITORS OF THE COMPANY AFTER DUE VERIFICATION, THE COPY OF RELEVANT DOCUME NTS/ANNEXURE TO THE TAX AUDIT REPORT (TAR) HAS BEEN BROUGHT ON RECORD WHICH CLEARLY SUGG EST THE LIABILITY ON ACCOUNT OF BONUS PAYABLE TO EMPLOYEE ON THE FIRST DATE OF PREVIOUS Y EAR WAS RS. 1,88,51,280/- OUT OF THIS AMOUNT THE ASSESSEE HAS MADE THE PAYMENT OF RS. 1,6 9,83,113/-. THE SAID AMOUNT WAS CLAIMED IN THE RETURN OF INCOME U/S 43B WHICH HAS B EEN DULY CERTIFIED BY THE AUDITORS. THUS, THE CLAIM OF THE ASSESSEE WAS BASED ON REPORT OF CHARTERED ACCOUNTANT (C.A.) IN THE FORM OF TAX AUDIT REPORT. THE LD. AR OF THE ASSESSE E FAIRLY ARGUED THAT THE ASSESSEE WAS NOT ABLE TO FURNISH THE COMPLETE EVIDENCE IN RESPEC T OF ABOVE CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDING WHICH RESULTED INTO DISALLOWA NCE. AS DUE TO THE PASSAGE OF TIME 3 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . COUPLED WITH CHANGE OF ACCOUNTING SOFTWARE USED BY THE ASSESSEE. INITIALLY, THE RETURN WAS SCRUTINIZED BY AO AND ASSESSMENT ORDER U/S 143(3) W AS PASSED ON 10.03.2006 WITHOUT ANY ADDITION OR DISALLOWANCE. THEREAFTER, THE ASSESSMEN T WAS RE-OPENED ON 31.03.2010 AND RE- ASSESSMENT ORDER U/S 143(3) RWS147 WAS PASSED ON 24 .12.2010. AFTER PASSAGE OF MORE THAN EIGHT YEARS, THE ASSESSEE WAS NOT IN A POSITION TO PRODUCE THE COMPLETE EVIDENCE IN SUPPORT OF THEIR CLAIM. THE CLAIM WAS MADE IN A TRANSPARENT MANNER DULY SUPPORTED BY REPORT OF INDEPENDENT C.A. THE DIFFICULTY IN THE FORM OF CHAN GE IN ACCOUNTING SOFTWARE HAS NEITHER BEEN DISPROVED OR NOR DISBELIEVED. THE LD. AR OF TH E ASSESSEE FURTHER ARGUED THAT THE CLAIM OF ASSESSEE REMAINED UNPROVED AND THE SAME HAS NOT BEEN DISPROVED OR FOUND TO BE FALSE AND THUS THE CASE IS NOT A FIT CASE FOR LEVY OF PEN ALTY. THE PENALTY LEVIED FOR ALLEGED FURNISHING OF INACCURATE PARTICULARS OF INCOME. E XPLANATION 1 ATTACHED WITH SECTION 271(1)(C) ENLARGES THE SCOPE OF MAIN SECTION ONL Y IN RESPECT OF CONCEALMENT OF INCOME AND NOT FOR INACCURATE PARTICULARS OF INCOME. TH E LD. AR OF THE ASSESSEE FURTHER ARGUED THAT ASSESSEE ASSESSED THE TOTAL LOSS OF RS. 473 CR ORE AND ASSESSEE HAS NO INTENTION TO MAKE INCORRECT CLAIM ON ACCOUNT OF RS. 1.69 CRORE WHEN T HE AMOUNT IS ADMITTEDLY ALLOWABLE AND THE ISSUE WAS ONLY THE YEAR OF ALLOWANCE AND IT IS NOBODIES CLAIM THAT AMOUNT HAS NOT BEEN PAID. THE QUESTION FALLS FOR CONSIDERATION IS WHET HER THE AMOUNT HAS BEEN PAID DURING THE YEAR OR NOT. THE ASSESSEE DOES NOT GET ANY ADVANTAG E BY CLAIMING THE DEDUCTION WHEN IT HAS SUFFERED A HUGE LOSS IN THE YEAR UNDER CONSIDER ATION AS WELL AS IN SUBSEQUENT YEARS. THE DEDUCTION U/S 43B WAS NOT A UNIQUE FEATURE FOR THE YEAR UNDER CONSIDERATION AND THE SAME WAS CLAIMED IN OTHER YEARS ON THE BASIS OF ACT UAL PAYMENT AND THE SAME HAS BEEN ALLOWED U/S 143(3). SO FAR AS THE PENALTY ON ADDITI ON ON ACCOUNT OF SALE OF SCRAP IS CONCERNED. IT WAS ARGUED THAT THE INCOME REMAINED T O BE OFFERED DUE TO MISTAKE IN PASSING PROPER JOURNAL ENTRY. THE ASSESSEE WAS FOLLOWING TH E ACCOUNTING SYSTEM WHEREIN RECEIPT ON ACCOUNT OF SALE OF SCRAP IS CREATED TO THE ACCOU NT OF PURCHASING PARTY INITIALLY AND THEREAFTER IT WAS TRANSFERRED TO THE INCOME ACCOUNT BY DEBITING PARTIES ACCOUNT AND DUE TO MISTAKE JOURNAL ENTRY REMAINED TO BE PASSED. WHEN T HIS AMOUNT WAS POINTED OUT, THE ASSESSEE ACCEPTED THE SAME AND NOT FILED ANY APPEAL BEFORE THE LD. CIT(A) AND IT WAS DUE TO OVERSIGHT AND THERE WAS NO INTENTION FOR FURNISH ING OF INACCURATE PARTICULAR. 5. ON THE OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. IT WAS ARGUED THAT THE CASE WAS OPENED ON THE BASIS OF SPE CIAL AUDITORS REPORT WHEREIN IT WAS POINTED THAT ASSESSEE HAS ISSUED CHEQUES TO EX-EMPL OYEES TO AVOID THE DISALLOWANCE U/S 43B OF THE ACT WHICH IS BEFORE FILING OF RETURN AND CLAIMED THE DEDUCTION U/S 43B OF THE ACT. ON APPEAL BEFORE THE LD. CIT(A) THE DISALLOWAN CE OF RS.1,67,45,647/- U/S 43B WAS 4 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . CONFIRMED. NO APPEAL FOR ADDITION ON ACCOUNT OF SAL E OF SCRAP WAS FILED. THE DISALLOWANCE AND THE ADDITION BECAME FINAL. IT WAS ARGUED THAT I F THE SPECIAL AUDIT HAVE NOT POINTED OUT, THE ADDITION/DISALLOWANCE HAVE BEEN CROPPED IN THE ASSESSMENT ORDER WOULD NOT HAVE SURFACED. THE CONTENTION OF THE ASSESSEE MADE FULL AND TRUE DISCLOSURE IS UNFOUNDED AND BASELESS. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE ORDER OF AUTHORITIES BELOW. THE AO WHILE LEVYING THE PENALTY CONCLUDED T HAT ON RECEIPT OF THE RESULT OF THE SPECIAL AUDIT U/S 142A, THE ASSESSMENT WAS FINALIZE D WHEREIN SUBSTANTIAL ADDITION ON ACCOUNT OF DISALLOWANCE U/S 43B AND ADDITION ON ACC OUNT OF SALE OF SCRAP WAS MADE. ON THE SAID DISALLOWANCE AND ADDITION, THE PENALTY PRO CEEDING WAS INITIATED. NO APPEAL WAS FILED BY ASSESSEE AGAINST THE ADDITION OF SALE ON S CRAP. THE SUBSTANTIAL AMOUNT OF THE DISALLOWANCE U/S 43B WAS SUSTAINED BY LD. CIT(A). THE AO LEVIED THE PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EVADED FOR FURNISHIN G INACCURATE PARTICULAR OF INCOME AND WORKS OUT A PENALTY OF RS. 50,34,573/-. THE LD. CIT (A) DISMISSED THE APPEAL OF THE ASSESSEE HOLDING THAT ON IDENTICAL FACTS, HE HAD DI SMISSED THE APPEAL OF ASSESSEE, AGAINST THE PENALTY ORDER FOR AY 2006-07. THE LD CIT(A) HAS NOT EXAMINED THE FACTS OF THE APPEAL PLACED BEFORE HIM FOR THE PENALTY VIS-A-VIS THE DISALLOWANCE FOR YEAR UNDER CONSIDERATION (AY 2003-04) INDEPENDENTLY. WE HAVE NOTICED THAT THE ASSESSEE FILED THE FURTHER APPEAL BEFORE THE TRIBUNAL, AGAINST THE ORD ER OF LD CIT(A) FOR SUSTAINING THE PENALTY FOR AY 2006-07. THE TRIBUNAL ALLOWED THE AP PEAL OF ASSESSEE VIDE ORDER DATED 16.12.2015 IN ITA NO.3200/M/2014. THOUGH, THE LD A R FOR THE ASSESSEE NOT RELIED ON THE ORDER OF TRIBUNAL ON PENALTY APPEAL FOR AY 2006-07. FOR, COMPARISION OF THE GROUNDS FOR LEVYING THE PENALTY, WE PERUSED THE ORDER OF TRIBUN AL IN DELETING THE PENALTY FOR AY 2006- 07. ON PERUSAL OF THE ORDER OF TRIBUNAL, WE FIND TH AT FACT OF AY 2006-07, EXCEPT FOR THE SALE OF SCRAPE, ALL REMAINING GROUNDS ARE ALTOGETHE R DIFFERENT. FOR AY 2006-07 THE PENALTY WAS LEVIED ON ACCOUNT OF VARIOUS DISALLOWANCE/ADDIT ION, CONSISTING OF DISALLOWANCE ON ACCOUNT OF NON-DEDUCTION OF TDS, DISALLOWANCE OF IN TEREST PAID FOR DELAYED TDS AND INTEREST ON EXCESS REFUND, EXCESS PROVISION FOR FRE QUENT FLYER PROGRAMMES, DOUBLE EXPENSES CLAIMED DURING THE YEAR UNDER AIRCRAFT FUE L EXPENSES, EXPENSES INCURRED ON PURCHASE OF SAP SOFTWARE, DISALLOWANCE U/S 40(A)(IA ) FOR NON-DEDUCTION OF TDS AND DISALLOWANCE OF BONUS PAID TO EMPLOYEES U/S 43G OF THE ACT. AS THE FACTS OF THE YEAR UNDER CONSIDERING ARE ALTOGETHER ARE DIFFERENT, THE LD. C IT(A) HAS NOT CONSIDERED THE RELEVANT FACT AND PASSED THE ORDER WITHOUT CONSIDERATION. THUS, T HE ORDER PASSED BY LD CIT (A) IS PERVERSE. IN SUCH CIRCUMSTANCES, WE DEEM IT APPROPR IATE TO RESTORE THE PRESENT APPEAL TO THE 5 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . FILE OF LD. CIT (A) TO DECIDE THE APPEAL AFRESH AFT ER CONSIDERING THE ALL FACTS INDEPENDENTLY, WITHOUT BEING INFLUENCE BY THE ORDER OF TRIBUNAL FO R AY 2006-07 IN ITA NO. 3200/MUM/2014 DATED 16.12.2015. NEEDLESS TO SAY THA T LD. CIT(A) SHALL GRANT A REASONABLE OPPORTUNITY BEFORE PASSING THE ORDER IN ACCORDANCE WITH LAW, HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 6597/MUM/2014 (APPEAL BY REVENUE) 7. IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE CORR ECTNESS OF ORDER OF LD. CIT(A)-9 DATED 28.08.2014 DELETING THE PENALTY LEVIED U/S 271(1)(C ) OF THE ACT. 8. BRIEF FACTS OF THE CASE ARE THAT THE AO LEVIED THE PENALTY IN RESPECT OF DISALLOWANCE U/S 40(A)(IA) OF RS. 2,34,40,207/- , ADDITION ON ACCOUN T OF BED DEBTS OF RS. 1,20,79,015/- AND ADDITION ON ACCOUNT OF INTEREST ON DELAYED PAYMENT OF TDS OF RS. 2,47,475/-. NO APPEAL WAS FILED ON ACCOUNT OF DOUBTFUL DEBTS AND NON DEDU CTION OF TDS. THE OTHER ADDITION RELATED TO DOUBTFUL DEBTS AND DISALLOWANCE U/S 40(A )(IA) WERE SUSTAINED BY LD. CIT(A). THUS, ON THE ADDITION OF DOUBTFUL DEBTS AND DISALLO WANCE U/S 40(A)(IA), THE AO LEVIED PENALTY @ 100% OF THE AMOUNT OF TAX SOUGHT TO BE EV ADED. THE PENALTY WAS WORKED OUT AT RS.1,07,30,009/- ON APPEAL BEFORE THE LD. CIT(A), T HE PENALTY WAS DELETED, THUS AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED T HE PRESENT APPEAL BEFORE US. 9. WE HAVE HEARD THE LD. DR FOR THE REVENUE AND LD. AR OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE RE VENUE RELIED UPON THE ORDER OF AUTHORITIES BELOW AND PRAYED TO RESTORE THE ORDER O F AO BY REVERSING THE ORDER PASSED BY LD. CIT(A). ON THE OTHER HAND, LD. AR OF THE ASSESS EE ARGUED THAT THE PENALTY IS NOT LIVEABLE ON TWO ADDITIONS WHICH ARE IN RESPECT OF N ORMAL PROVISION OF THE ACT. THE INCOME OF THE ASSESSEE IS ASSESSED UNDER MAT PROVISIONS. T HE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT IN RESPECT OF THE ADDITION ON ACCOUNT O F DOUBTFUL DEBTS, THE ASSESSEE ACCEPTED DUE TO THE FACT THAT RETROSPECTIVE AMENDMENT WAS BR OUGHT BY FINANCE ACT, 2009 WHEREAS THE RETURN OF INCOME WAS FILED ON 30.10.2007 AND TH E ASSESSEE CANNOT BE SADDLED WITH PENALTY FOR NOT DISALLOWING THE CERTAIN AMOUNT DEBI TED IN P&L ACCOUNT OUT OF BONAFIDE BELIEF THAT THE SAME WAS ALLOWABLE. THIS FACT WAS B ROUGHT ON RECORD BY THE ASSESSEE BEFORE THE LD. CIT(A) AND THE ASSESSEE WAS FINALLY ASSESSE D UNDER THE DEEMING PROVISION OF SECTION 115JB. ACCORDINGLY, THE LD. CIT(A) AFTER A PPRECIATING THE FACTS HELD THAT NO PENALTY ON THE DISALLOWANCE/ADDITION UNDER NORMAL P ROVISION IS LIVEABLE. THE LD. AR FURTHER RELIED UPON THE DECISION OF HONBLE DELHI H IGH COURT IN CIT VS NALVA SONS INVESTMENT 327 ITR 543. WITH REGARD TO THE PENALTY ON ADDITION ON ACCOUNT OF DOUBTFUL DEBTS, LD. LD. AR OF THE ASSESSEE SUPPORTED THE ORD ER OF LD. CIT(A) AND TO BUTTRESS HIS 6 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . SUBMISSION ARGUED THAT THIS QUESTION WAS DEBATABLE AT THE TIME OF FILING OF RETURN OF INCOME AND THE AMENDMENT WAS BROUGHT WITH RETROSPEC TIVE EFFECT AFTER FILING OF RETURN OF INCOME. THE ASSESSEE NEITHER FURNISHED INACCURATE P ARTICULAR NOR CONCEALED ANY INCOME AS PER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. THE LD. AR FURTHER RELIED UPON THE CBDT CIRCULAR NO. 25 OF 2015 DATED 31.12.2015. 10. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE AO LEVIED THE PENALTY IN RESPECT OF DISALLOWANCE U/S 40(A)(IA) OF RS. 2,34,40,207/- AND PROVISIONS FOR DOUBTFUL DEBT OF R S. 1,20,79,015/- HOLDING THAT THE ADDITION ON DISALLOWANCE U/S 40(A)(IA) WAS UPHELD B Y LD. CIT(A) IN TOTO AND THE ASSESSEE HAS NOT FILED ANY APPEAL IN RESPECT OF DOUBTFUL DEB T AND LEVIED THE PENALTY @ 100% OF THE TAXED AMOUNT SOUGHT TO BE EVADED ON ACCOUNT OF FURN ISHING INACCURATE PARTICULAR. THE LD. CIT(A) WHILE CONSIDERING THE SUBMISSION OBSERVED TH AT INCOME OF THE ASSESSEE WAS ASSESSED UNDER DEEMING PROVISION OF SECTION 115JB O F THE ACT AND CONCLUDED THAT AS PER THE DECISION OF HONBLE DELHI HIGH COURT IN CIT VS. NALVA SONS INVESTMENTS (SUPRA), THE PENALTY U/S 271(1)(C) IS NOT LEVIABLE. THE LD. CIT( A) FURTHER RELIED UPON THE DECISION OF MUMBAI TRIBUNAL IN VASANT INVESTMENT CORPORATION VS . DEPARTMENT OF INCOME-TAX IN ITA NO. 1146/MUM/2012 DATED 05.06.2013 AND DELETED THE PENALTY. WE HAVE SEEN THAT AFTER THE DECISION OF HONBLE DELHI HIGH COURT IN M /S NALVA SONS INVESTMENTS (SUPRA), THE CBDT ISSUED CIRCULAR NO. 25 OF 2015 DATED 31.12.20 15, THE RELEVANT PART OF SAID CIRCULAR IS REPRODUCED BELOW: SUBJECT: PENALTY U/S 271(1)(C) WHEREIN ADDITIONS/DI SALLOWANCES MADE UNDER NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961 BUT TAX LEVI ED 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 FINANCE 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 PART ICULARS OF INCOME IS DETERMINED BASED ON THE 'AMOUNT OF TAX SOUGHT TO BE EVADED' WH ICH HAS BEEN DEFINED INTER-ALIA, AS THE DIFFERENCE BETWEEN THE TAX DUE ON THE INCOME AS SESSED AND THE TAX WHICH WOULD HAVE BEEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF CONCEALED INCOME OR INCOME IN RESPECT OF WHICH INACCURATE PAR TICULARS 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 NA1WA SONS INVESTMEN T LTD. (AVAILABLE IN NJRS AS 2010- LL-0826-2), HELD THAT WHEN THE TAX PAYABLE ON INCOM E COMPUTED UNDER NORMAL PROCEDURE IS LESS THAN THE TAX PAYABLE UNDER THE DE EMING PROVISIONS OF SECTION 1L5JB OF THE ACT, THEN PENALTY UNDER SECTION 271(1)(C) OF TH E ACT COULD NOT BE IMPOSED WITH REFERENCE TO ADDITIONS/DISALLOWANCES MADE UNDER NOR MAL PROVISIONS. THE JUDGMENT HAS ATTAINED FINALITY. 4. SUBSEQUENTLY, THE PROVISIONS OF EXPLANATION 4 TO SUB-SECTION (I) OF SECTION 271 OF THE ACT HAVE BEEN SUBSTITUTED BY FINANCE ACT, 2015, WHI CH 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 LESS THA N THE INCOME DECLARED FOR THE 7 ITA NOS. 6596& 6597/M/2014 JET AIRWAYS (INDIA) LTD . PURPOSE OF MAT U/S 115JB OF THE ACT. THE SUBSTITUTE D 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 114/2016, 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 115JB OF THE ACT, THEN PENALTY UND ER 271(1)(C) OF THE ACT, IS NOT ATTRACTED WITH REFEREN CE TO ADDITIONS/DISALLOWANCES MADE UNDER NORMAL PROVISIONS. IT IS FURTHER CLARIFIED TH AT IN CASES PRIOR TO 1.4.2016, IF ANY ADJUSTMENT IS MADE IN THE INCOME COMPUTED FOR THE P URPOSE OF MAT, THEN THE LEVY OF PENALTY U/S 271(L)(C) OF THE ACT, WILL DEPEND ON TH E NATURE OF ADJUSTMENT. 6. THE ABOVE SETTLED POSITION IS TO BE FOLLOWED IN RESPECT OF SECTION IISJC 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 I SSUE BEFORE VARIOUS COURTS/TRIBUNALS MAY BE WITHDRAWN/NOT PRESSED UPON. THIS MAY BE BROU GHT TO THE NOTICE OF ALL CONCERNED. 11. CONSIDERING THE DECISION OF HONBLE DELHI HIGH COUR T IN M/S. NALVA SONS INVESTMENTS (SUPRA), MUMBAI TRIBUNAL IN VASANT INVESTMENT CORPO RATION (SUPRA) AND CBDT CIRCULAR NO. 25 OF 2015, WE DO NOT FIND ANY ILLEGALITY OR IN FIRMITY IN THE ORDER PASSED BY LD. CIT (A). HENCE, APPEAL FILED BY THE REVENUE IS DISMISSE D. 12. IN THE RESULT, APPEAL OF THE ASSESSEE FOR AY 2003-0 4 BEING ITA NO. 6896/MUM/2014 IS ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL FILE D BY THE REVENUE FOR AY 2007-08 BEING ITA NO. 6597/MUM/2014 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST FEBRUARY 2017. + ! , - 1 QJ ( , 201 7 ! 12 3 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER 2 /MUMBAI, - /DATE: 01.02.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 45 ( 6' , 4. THE CONCERNED CIT / 45 6' 5. DR E BENCH, ITAT, MUMBAI / 781 '95 B BB B , . . . 2 6. GUARD FILE/ 1 2 7' /TRCOPY// + / BY ORDER, / DY./ASST. REGISTRAR ( 95 , 2 /ITAT, MUMBAI