M/s. Agarvanshi Aluminium Ltd, Secunderabad V. DCIT, Circle-1(1), Hyderabad

ITA 865/HYD/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1324 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 10-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G KOMAL KISHORE
• Assessee Lawyers: K C DEVADAS
• Keywords: Depreciation; Deemed to accrue or arise in india; Wrong claim
• Section: 6; 12; 10; 2; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.865/HYD/2011 : ASSESSMENT YEAR 2000-01 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD. (PAN - AABCA 7440 A ) V/S DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.C.DEVADAS RESPONDENT BY : SMT.G.KOMAL KISHORE DR DATE OF HEARING 29.01.2013 DATE OF PRONOUNCEMENT 22. 0 2.2013 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-II HYDERABA D DATED 31.3.2011, CONFIRMING PARTLY THE PENALTY OF RS.37,0 0,000 LEVIED BY THE ASSESSING OFFICER UNDER S.271(1)(C) OF THE INCOME-T AX ACT, 1961 FOR THE ASSESSMENT YEAR 2000-01. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO LEGALITY LAND VALIDITY OF THE PENALTY UNDER S.271(1)(C) OF THE AC T, IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A), 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E COMPANY, ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF ALUMINUM PROFILES, HAS FILED THE RETURN OF INCOME ON 30.11.2000 DECLAR ING A LOSS OF RS.1,13,90,167. INITIALLY THE RETURN WAS PROCESSED UNDER S.143(1) OF THE ACT ON 20.3.2002 THE CASE WAS SUBSEQUENTLY REOPENE D UNDER S.147 OF ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 2 THE ACT TO VERIFY THE ALLOWABILITY OF ADJUSTMENT MA DE, WHEREBY THE ASSESSEE COMPANY HAS REDUCED AN AMOUNT OF RS.85,60, 925 FROM THE BOOK PROFITS TOWARDS SALES TAX ETC. THE ASSESSMENT WAS ULTIMATELY COMPLETED ON A TOTAL INCOME OF RS.37,21,509 UNDER MAT PROVISI ONS, AS THE TOTAL INCOME UNDER THE NORMAL PROVISIONS WAS NIL, AFTER SET OFF OF BROUGHT FORWARD LOSSES, VIDE ORDER OF ASSESSMENT, DATED 2 7.2.2004 PASSED UNDER S.143(3) READ WITH S.147 OF THE ACT. 4. WHILE COMPLETING THE RE-ASSESSMENT AS ABOVE, T HE ASSESSING OFFICER DISALLOWED THE ADJUSTMENT MADE BY THE ASSES SEE IN RESPECT OF SALES TAX OF RS.85,60,925 FROM THE NET PROFIT OF RS .37,21,509; AND ALSO DISALLOWED THE ASSESSEES CLAIM FOR LOSS ON SALE OF SHARES OF RS.5,80,110, WHICH WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. AS FOR THE FIRST ITEM OF RS.85,60,925, THE ASSESSING OFFICER NOTICED THAT WH ILE COMPUTING THE TOTAL TAXABLE INCOME ASSESSEE REDUCED AN AMOUNT FOR S.85,60,925 TOWARDS SALES TAX FROM THE NET PROFIT BOTH UNDER T HE REGULAR PROVISIONS AND ALSO FOR COMPUTING THE BOOK PROFITS UNDER S.115 JA OF THE ACT, ON THE GROUND THAT THAT THE SAID SALES TAX WAS INCLUDED IN THE TURNOVER, BUT NOT DEBITED TO THE PROFIT & LOSS ACCOUNT. THE LOSS WAS ARRIVED AT RS.58,39,416 AND THE BOOK PROFIT AT RS.NIL. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SAID ADJUSTMENT MADE BY THE ASSES SEE IS NOT PROVIDED FOR IN EXPLANATION TO S.115JA. THE ASSESSING OFFIC ER DID NOT FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE SAID ADJUST MENT WAS MADE SO AS TO ARRIVE AT REAL INCOME FOR THE PURPOSE OF S.115JA , SINCE THE SAID TAX WAS INCLUDED IN THE GROSS TURNOVER BUT NOT DEBITED TO T HE PROFIT & LOSS ACCOUNT. IT WAS ALSO SUBMITTED THAT IT IS THE ARIT HMETICAL CORRECTNESS OF THE PROFIT IN THE PROFIT & LOSS ACCOUNT THAT IS REL EVANT FOR S.115JA COMPUTATION, BUT NOT ADJUSTMENTS, WHICH ARE DEBATAB LE OR DISPUTABLE., THE ASSESSING OFFICER RELYING ON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF APOLLO TYRES LTD. V/S. CIT(255 ITR 273), FOUND NO MERIT IN THE CONTENTIONS OF THE ASSESSEE, AND ACCOR DINGLY DISALLOWED THE ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 3 ASSESSEES CLAIM FOR DEDUCTION OF THE SALES TAX OF RS.85,60,925 FROM THE BOOK PROFITS OF RS.37,21,509. 5. SIMILARLY, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPANY DEBITED THE AMOUNT OF RS.5,80,110 REPRESENT ING LOSS ON SALE OF SHARES TO THE PROFIT & LOSS ACCOUNT, AS PER SCHEDUL E 11, APPENDED TO THE PROFIT & LOSS ACCOUNT. SINCE THIS LOSS SHOULD BE C ONSIDERED SEPARATELY AS CAPITAL LOSS, ASSESSEE WAS ASKED TO EXPLAIN WHY THI S LOSS SHOULD NOT BE DISALLOWED. IN THE ABSENCE OF ANY EXPLANATION FROM THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE CLAIM FOR DEDUCTIO N OF THIS LOSS FROM THE BOOK PROFIT AS PER PROFIT & LOSS ACCOUNT. 6. BOTH THE ABOVE DISALLOWANCES MADE BY THE ASSESS ING OFFICER, WHILE COMPLETING THE ASSESSMENT UNDER S.143(3) READ WITH S.147 OF THE ACT, AS ABOVE, HAVE BEEN SUSTAINED ON FIRST APPEAL BY THE CIT(A) AND ON FURTHER APPEAL BY THE TRIBUNAL. 7. WHILE COMPLETING THE ASSESSMENT AS ABOVE, THE ASSESSING OFFICER INITIATED THE PENALTY PROCEEDINGS UNDER S.2 71(1)(C) BY ISSUING A NOTICE UNDER S.274 READ WITH S.271 OF THE ACT DATED 27.2.2004 FOR FURNISHING INACCURATE PARTICULARS OF INCOME, IN THE RETURN FOR THE ASSESSMENT YEAR 2000-01. A FURTHER LETTER DATED 5. 2.2009 WAS ALSO ISSUED TO THE ASSESSEE COMPANY ASKING IT TO SHOW CA USE AS TO WHY A PENALTY UNDER S.271(1)(C) SHOULD NOT BE ISSUED. TH E ASSESSEE COMPANY VIDE ITS REPLY DATED 11.2.2009 STATED THAT THE MER E DISALLOWANCES MADE RESULTED IN ADDING BACK TO THE PROFIT COMPUTED, AND AS SUCH, THERE WAS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE P ARTICULARS OF INCOME. FINDING NO MERIT IN THE EXPLANATION OF THE ASSESSEE , ASSESSING OFFICER IMPOSED PENALTY OF RS.37,00,000, WITH THE FOLLOWIN G OBSERVATIONS- ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 4 AFTER CAREFUL CONSIDERATION OF ASSESSEE REPLY ON T HE FACTS OF CASE AS DISCUSSED IN ASSESSMENT ORDER IN DETAIL AND AS U PHELD BY HONBLE CIT(A) AND FURTHER BY ITAT AS EXTRACTED ABO VE IS NEITHER REASONABLE NOR JUSTIFIABLE. FROM THE ABOVE FACTS O F CASE AS EXTRACTED ASSESSEE HAS A CLEAR KNOWLEDGE OF ADJUSTM ENTS ENVISAGED UNDER SECTION 115JA OF IT ACT AND HAS ARG UED AND CONTENDED THAT THE SAID AMOUNT WAS MISTAKENLY CREDI TED TO P&L ACCOUNT AND JUSTIFIED ITS EXCLUSION WHILE COMPUTING BOOK PROFITS. THE ASSESSEES CONTENTIONS WERE CONCLUSIVELY PROVED AS NOT JUSTIFIABLE AND ACCEPTABLE IN APPELLATE AUTHORITIES . HENCE, ASSESSEE WAS SUBMITTED INACCURATE PARTICULARS OF IN COM E WITH A CLEAR KNOWLEDGE OF THE SAME AS DISCUSSED SUPRA AND PENALTY PROVISIONS UNDER S.271(1)(C) WERE SQUARELY ATTRACTE D IN THIS CASE. THE MINIMUM AND MAXIMUM PENALTIES LEVIABLE ARE RS.3 5,19,300 AND RS.1,05,57,900 RESPECTIVELY. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, PENALTY OF RS.37,00,000 IS HEREBY LEVIED ON THE ASS ESSEE COMPANY. 8. ON APPEAL AGAINST THE SAID PENALTY, THE CIT(A), OBSERVING THAT THE APPELLATE AUTHORITIES IN THE QUANTUM PROCEEDING S DID NOT FIND THE CONTENTIONS OF THE ASSESSEE IN RELATION TO BOTH THE DISALLOWANCES AS NOT JUSTIFIABLE OR ACCEPTABLE, CONFIRMED THE LEVY OF PE NALTY UNDER S.271(1)(C) OF THE ACT. IN RESPECT OF ALLOWABILITY OF DEDUCTIO N WITH REGARD TO SALES TAX LIABILITY OF RS.85,60,925, THE CIT(A), THE CIT(A) NOTED THAT THOUGH THE ASSESSEE HAS BEEN TAKING THE STAND THAT THE AMOUNT OF SALES TAX WAS MISTAKENLY CREDITED TO PROFIT & LOSS ACCOUNT AND JU STIFIED ITS EXCLUSION WHILE COMPUTING THE BOOK PROFITS, IT FAILED TO SHOW THAT THE ASSESSEES CLAIM OF SALES TAX FALLS UNDER ANY OF THE CLAUSES O F EXPLANATION TO S.115JA OF THE ACT OR THE BOOKS OF ACCOUNT ARE NOT CERTIFIE D BY THE AUTHORITIES UNDER THE COMPANIES ACT. FURTHER, WITH REGARD TO D ISALLOWANCE OF LOSS ON SALE OF SHARES OF RS.5,80,110, THE CIT(A) TAKING NO TE OF THE FACTUAL ASPECTS OF THE MATTER, NOTED BY THE ASSESSING OFFIC ER AND THE APPELLATE AUTHORITIES IN THE QUANTUM PROCEEDINGS, FOUND THAT THE ASSESSEE DID NOT FILE ANY DETAILS RELATING TO THE SAID LOSS EITHER A T ASSESSMENT STAGE OR AT FIRST APPELLATE STAGE EXCEPT STATING THAT THE LOSS WAS BUSINESS LOSS. HE NOTED THAT THE SHARES WERE NOT SHOWN AS STOCK IN TR ADE BUT AS INVESTMENTS IN THE BALANCE SHEET, AND BEFORE THE IT AT, THE ASSESSEE DID ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 5 NOT CONTEST THE DISALLOWANCE AT ALL. CONSIDERING T HIS POSITION, THE CIT(A) CONCLUDED THAT THE ASSESSEE HAD NO EXPLANATION TO O FFER IN SUPPORT OF THE CLAIM OF IT BEING BUSINESS LOSS, CONFIRMED THE ACT ION OF THE ASSESSING OFFICER IN LEVYING PENALTY IN RELATION TO THIS ITEM . 9. AGGRIEVED BY THE ORDER OF THE CIT(A), ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 10. THE LEARNED COUNSEL FOR THE ASSESSEE, REITERAT ING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES SUBM ITTED THAT THE ASSESSEE HAD NEITHER CONCEALED THE PARTICULARS OF I NCOME NOR FURNISHED INACCURATE PARTICULARS AND THEREFORE, THE PROVISION S OF S.271(1) ARE NOT AT ALL ATTRACTED IN THE INSTANT CASE. HE SUBMITTED T AKING US THROUGH THE PROVISIONS OF S.271(1)(C) OF THE ACT THAT THAT AS P ER EXPLANATION 4 OF S.271(1)(C) OF THE ACT, THE PENALTY IS LEVIABLE WIT H RESPECT TO THE AMOUNT OF TAX SOUGHT TO BE EVADED, AND LAYING EMPHASIS ON THE DETERMINATION OF INCOME UNDER S.115JB OF THE ACT, HE SUBMITTED THAT NO PENALTY COULD BE LEVIED IN RESPECT OF ADDITIONS/DISALLOWANCES MADE B Y THE ASSESSING OFFICER. IN THIS CONTEXT, HE ELABORATED THAT THE T AX SOUGHT TO BE EVADED WOULD BE THE DIFFERENCE BETWEEN THE TAX DUE ON THE INCOME ASSESSED AND THE TAX THAT WOULD HAVE BEEN CHARGEABLE AND SUCH T OTAL INCOME BEEN REDUCED BY THE AMOUNT OF CONCEALED INCOME. THUS, TH E PENALTY IS LEVIED ON THE BASIS OF THE TAX ON THE DIFFERENCE BETWEEN T HE INCOME ASSESSED AND THE INCOME RETURNED. ON THIS PRINCIPLE, HE SUB MITTED THAT THE PENALTY COULD NOT BE IMPOSED IN THE PRESENT CASE, AS THE AS SESSEE HAD PAID THE TAX ON DEEMED INCOME UNDER MAT PROVISIONS, CONTAINE D IN S.115JB OF THE ACT, WHICH INCOME WAS MORE THAN THE INCOME ASSESSED AS PER NORMAL PROCEDURE. THE SCHEME OF THE ACT IS THAT IF THE TAX PAYABLE UNDER NORMAL PROCEDURE IS HIGHER, SUCH AMOUNT IS TAXABLE INCOME OF THE ASSESSEE; AND OTHERWISE, THE BOOK PROFITS ARE DEEMED AS THE TOTAL INCOME OF THE ASSESSEE. IN THE CIRCUMSTANCES, IT IS SUBMITTED THA T ONCE BOOK PROFITS, BY ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 6 A LEGAL FICTION, ARE DEEMED TO BE THE TOTAL INCOME OF THE ASSESSEE, SUCH DEEMING FICTION MUST BE TAKEN TO ITS LOGICAL CONCLU SION, AND AS A NECESSARY COROLLARY, IN SUCH A CASE, WHERE INCOME O F AN ASSESSEE COMPANY IS FINALLY ASSESSED AT BOOK PROFITS BY DE EMING THE SAME TO BE TOTAL INCOME OF THE ASSESSEE, PENALTY IMPOSABLE UND ER S.271(1)(C) OF THE ACT COULD ONLY BE LEVIED IN RESPECT OF ANY ADJUSTME NT/ADDITION/- DISALLOWANCE MADE WHILE COMPUTING SUCH BOOK PROFIT . IN SUCH A SITUATION, THE REVENUE CANNOT BE ALLOWED TO IMPOSE PENALTY WIT H REFERENCE TO THE ADDITIONS/DISALLOWANCES MADE WHILE COMPUTING NORMAL INCOME, SINCE SUCH INCOME PALES INTO INSIGNIFICANCE, BOTH FOR THE PURP OSE OF IMPOSITION OF TAX AND ALL LOGICAL CONSEQUENCES FOLLOWING THEREON. IN NUTSHELL, HIS SUBMISSION WAS THAT WHEN THE TAX WAS IMPOSED AND CA LCULATED UNDER THE ACT ON THE DEEMED INCOME UNDER S.115JB OF THE ACT, FOR THE PURPOSES OF IMPOSITION OF PENALTY, THE DEPARTMENT COULD NOT REV ERT BACK TO THE NORMAL INCOME AS IT WOULD LEAD TO AN ABSURD SITUATION OF T WO DIFFERENT INCOMES OF THE SAME PERSONS FOR THE SAME ASSESSMENT YEAR. FUR THER MORE, WHEN THE INCOME-TAX IS PAID ON THE BOOK PROFITS, BY V IRTUE OF A LEGAL FICTION, SUCH LEGAL FICTION HAS TO BE TAKEN TO ITS LOGICAL C ONCLUSION. IN SUPPORT OF THESE CONTENTIONS, HE REFERRED TO THE FOLLOWING DEC ISIONS- (A) A.S.GLITTRE V/S. CIT(225 ITR 739) (B) M.VENUGOPAL V?S. DIVISIONAL MANGER, LIC OF INDIA (A IR 1994 SC 1343) (C) UNION OF INDIA V/S. JALYAN UDYOG (AIR 1994 SC 88) (D) BUILDERS ASSOCIATION OF INDIA V/S. UNION OF INDIA ( 73 STC 370)- SC; (E) CIT V/S. NALWA SONS INVESTMENT LTD. (PETITION FOR S PECIAL LEAVE TO APPEAL (CIVIL) NO.18564/2011)-SC (F) PRICE WATERHOUSE COOPERS PVT. LTD. V/S. CIT (CIVIL APPEAL NO.6924 OF 2012(ARISING OUT OF SLP(C)NO.10700 OF 20 09)- SC THUS, ACCORDING TO THE LEARNED AUTHORISED REPRESENT ATIVE, EVEN IF PENALTY HAS TO BE LEVIED UNDER S.271(1)(C) OF THE ACT, IT S HOULD BE EQUIVALENT TO ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 7 THE TAX SOUGHT TO BE EVADED. ACCORDINGLY, HE SUBMIT TED THAT THE TAX SOUGHT TO BE EVADED IS RS.4,29,834, WHICH IS COMPUT ED AS FOLLOWS- DISCLOSED(RS.) ASSESSED(RS.) BOOK PROFIT 37,21,509 11,16,453 (30% OF 37,21,509) DEDUCTION OF SALES TAX CLAIM ED (85,60,925) NOT ALLOWED ___________ _____________ LOSS (34,87,39,416) 11,16,453 ____________ _____________ TAX PAYABLE NIL RS.4,29,834 THUS TAX SOUGHT TO BE AVOIDED IS RS.4,29,834 ========= MINIMUM PENALTY IS EQUIVALENT TO TAX WHICH IS RS. 4,29,834 MINIMUM PENALTY LEVIED IS RS.37,00,000 .. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON TH E OTHER HAND, STRONGLY SUPPORTING THE ORDERS OF THE REVENUE AUTHO RITIES, COUNTERED THE SUBMISSIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE AND SUBMITTED THAT EVEN WHERE THE BOOK PROFIT IN TERMS OF S.115JB IS D ETERMINED AT A FIGURE HIGHER THAN THE RETURNED FIGURE, PENALTY COULD BE L EVIED, BY VIRTUE OF PROVISIONS OF SUB-SECTION (5) OF S.115JB, WHICH ST IPULATES THAT SAVE AS OTHERWISE PROVIDED IN THAT SECTION, ALL OTHER PROVI SIONS OF THE ACT SHALL APPLY TO THE ASSESSEE. SHE FURTHER SUBMITTED THAT T HE DECISION OF THE HONBLE DELHI HIGH COURT RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS CLEARLY DISTINGUISHABLE ON FACTS. ELAB ORATING IN THIS BEHALF, IT IS SUBMITTED THAT PENALTY UNDER S.271(1)(C) WAS IMP OSED IN THAT CASE ON CONCEALMENT OF CLAIM OF DEPRECIATION DISALLOWED BY THE ASSESSING OFFICER, THAT THE CLAIM WAS NOT CONSIDERED WHILE COMPUTING T HE INCOME OF THE ASSESSEE UNDER S.115JB OF THE ACT, WHEREAS IN THE I NSTANT CASE, THE CLAIM OF SALES TAX LIABILITY WAS CONSIDERED WHILE COMPUTI NG THE INCOME UNDER S.115JB OF THE ACT.. IT IS FURTHER SUBMITTED THAT THE DECISION OF THE HONBLE SUPREME COURT IN CIT V/S. GOLD COIN HEALTH CARE LTD. (SUPRA), ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 8 HAS MADE THE LEGAL POSITION CRYSTAL CLEAR BY LAYING DOWN THAT EVEN WHERE THE ASSESSED INCOME AS WELL AS RETURNED INCOME ARE FIGURES OF LOSS, PENALTY CAN BE LEVIED UNDER S.271(1)(C) OF THE ACT. IT IS FURTHER SUBMITTED THAT NO RESTRICTIVE MEANING COULD BE GIVE N TO THE TERM AMOUNT OF TAX SOUGHT TO BE EVADED, SINCE THE STATUTORY PR OVISIONS MAKE IT CLEAR THAT WHERE THE LOSS HAS BEEN DETERMINED BY THE ASSE SSING OFFICER AT A FIGURE LESS THAN THE RETURNED INCOME, THEN IT WOULD AMOUNT TO CONCEALMENT OF INCOME AND THE TAX ON THE SAID AMOUN T WOULD BE TREATED AS THE AMOUNT OF TAX SOUGHT TO BE EVADED. SHE FURT HER SUBMITTED THAT THE PENALTY UNDER S.271(1)(C) OF THE ACT IS PERMISS IBLE EVEN IN A CASE WHERE THE INCOME IS DETERMINED BY RESORTING TO MAT PROVISIONS, BECAUSE ONCE THE BOOK PROFITS ARE BY A LEGAL FICTION DEEMED TO BE TOTAL INCOME OF THE ASSESSEE, SUCH DEEMING FICTION MUST BE TAKEN TO ITS LOGICAL CONCLUSION, AND AS A NECESSARY COROLLARY IN SUCH A CASE WHERE INCOME OF AN ASSESSEE COMPANY IS FINALLY ASSESSED AT BOOK PR OFIT BY DEEMING THE SAME TO BE TOTAL INCOME OF THE ASSESSEE, PENALTY IM POSABLE UNDER S.271(1)(C) OF THE ACT COULD ONLY BE LEVIED IN RESP ECT OF ANY ADJUSTMENT/ADDITION/DISALLOWANCE MADE WHILE COMPUTI NG SUCH BOOK PROFITS. THIS POSITION, ACCORDING TO THE LEARNED DE PARTMENTAL REPRESENTATIVE, IS FURTHER EMPHASIZED BY PROVISIONS OF S.115JB(5), WHICH STIPULATE, SAVE AS OTHERWISE PROVIDED IN THAT SECTI ON, THE APPLICABILITY OF ALL OTHER PROVISIONS OF THE ACT, WHERE INCOME IS DE TERMINED BY RESORTING TO MAT PROVISIONS 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN THIS CASE, TH E ASSESSEE WAS ASSESSED IN TERMS OF S.115JB OF THE ACT, PROCEEDING ON THE B ASIS OF BOOK PROFIT. WHILE COMPUTING THE BOOK PROFIT, THE ASSESSEE CONSI DERED THE BOOK PROFIT AS PER PROFIT & LOSS ACCOUNT AT RS.37,21,509. THER EAFTER, IT HAS DEDUCTED SALES TAX LIABILITY OF RS.85,60,925 AND SHOWN THE B OOK PROFIT AT NEGATIVE FIGURE OF RS.48,39,416. HOWEVER, CORRECT BOOK PROF IT WAS 30% OF PROFIT ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 9 SHOWN IN THE PROFIT & LOSS ACCOUNT, I.E. 30% OF RS. 37,21,589 WHICH WORKED OUT TO RS.11,16,4533. THUS, TO THAT EXTENT, THERE WAS A WRONG CLAIM MADE BY THE ASSESSEE. FOR THIS LAPSE ON THE PART OF THE ASSESSEE, THE ASSESSING OFFICER LEVIED PENALTY OF RS.37 LAKHS . ACCORDING TO THE ASSESSEE, EVEN IF PENALTY IS TO BE LEVIED, IT SHOUL D BE A MAXIMUM OF RS.4,29,834. ON THIS COUNT ALSO, HE OBJECTED TO TH E ORDERS OF THE LOWER AUTHORITIES. IN THE PRESENT CASE, INCOME WAS CHARG EABLE TO TAX ON ACCOUNT OF DEEMED PROVISIONS OF S.115JB OF THE ACT , ACCORDING TO WHICH INCOME WAS ASSESSABLE ON BOOK PROFIT. THERE IS NO DISPUTE THAT THE COMPUTATION UNDER NORMAL PROVISIONS IS NET LOSS AND THE ASSESSEE WAS NOT LIABLE FOR ANY TAX. AS THE INCOME UNDER THE NORMAL PROVISIONS IS LOSS, THE ASSESSEE IS LIABLE UNDER S.115JB OF THE ACT ON BOOK PROFIT BECAUSE OF LEGAL FRICTION THAT THE ASSESSEE WAS LIABLE TO INCOME TAX . HAD THE INCOME IS COMPUTED UNDER THE NORMAL PROVISIONS, IT CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED INCOME. THUS, TAX PAID ON T HE INCOME COMPUTED AS PER BOOK PROFIT UNDER S.115JB OF THE ACT HAS NO SIGNIFICANCE OR ROLE TO PLAY IN DECIDING WHETHER THE ASSESSEE HAS CONCEALED THE INCOME. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE J UDGMENT OF THE APEX COURT IN THE CASE OF GOLD COIN HEALTH CARE LTD. (3 04 ITR 308), WHICH DOES NOT DEAL WITH THE PRESENT SITUATION. WHAT IS HELD BY THE APEX COURT IN THAT CASE IS THAT EVEN IF IN THE INCOME-TAX RETU RN FILED BY THE ASSESSEE, LOSS IS SHOWN, THE PENALTY CAN STILL BE IMPOSED IN A CASE WHERE ON SETTING OFF THE CONCEALED INCOME AGAINST THE LOSS DISCLOSED BY THE ASSESSEE, UNDER OTHER HEAD OF INCOME OR BROUGHT FORWARD FROM EARLIER YEARS, THE TOTAL INCOME IS REDUCED TO A FIGURE LOWER THAN THE CONCEALED INCOME OR EVEN CONVERTED INTO A MINUS FIGURE. THE SUPREME COU RT WAS OF THE OPINION THAT THE EXPRESSION TAX SOUGHT TO BE EVADED WILL MEAN THE TAX CHARGEABLE ON THE CONCEALED INCOME, TREATING THE SA ME AS THE TOTAL INCOME. ONCE WE APPLY THE RATIONAL TO EXPLANATION 4 TO S.271(1)(C) OF THE ACT, IT WILL BE DIFFICULT TO SUSTAIN THE PENALTY P ROCEEDINGS. NO DOUBT, THERE WAS CONCEALMENT, BUT THAT ITSELF WOULD HAVE R EPERCUSSIONS ONLY ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 10 WHEN THE ASSESSMENT WAS DONE UNDER THE NORMAL PROVI SIONS. IN THE PRESENT CASE, THERE WAS NO NORMAL COMPUTATION OF IN COME. IT IS A COMPUTATION OF INCOME UNDER S.115JB OF THE ACT. BE ING SO, WHATEVER CONCEALMENT IS NOTICED, IT HAS BECOME IRRELEVANT, AS THERE IS NO QUESTION OF LEVY OF PENALTY UNDER S.271(C) OF THE ACT ACCOR DINGLY, WE DELETE, THE IMPUGNED PENALTY. 13. OUR FINDING, AS ABOVE, IS WELL SUPPORTED BY T HE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT V/S. CIT V/S. NAL WAR SONS INVESTMENT LTD. (SUPRA), WHEREIN THE HONBLE SUPREME COURT VI DE ITS JUDGMENT DATED 26 TH AUGUST, 2010, DISMISSED THE SLP OF THE REVENUE. FU RTHER, THE APEX COURT IN THE CASE OF CIT V RELIANCE PETRO-PRODUCTS P LTD 322 ITR 158 (SC) HELD AS FOLLOWS- A GLANCE AT THE PROVISIONS OF SECTION 271(1)(C) OF THE IT ACT, 1961 SUGGESTS THAT IN ORDER TO BE COVERED BY IT, THERE H AS TO BE CONCEALMENT OF THE PARTICULARS OF THE INCOME OF THE ASSESSEE. S ECONDLY, THE ASSESSEE MUST HAVE FURNISHED INACCURATE PARTICULARS OF HIS INCOME. THE MEANING OF THE WORD PARTICULARS USED IN SECTI ON 271(1)(C) WOULD EMBRACE THE DETAILS OF THE CLAIM MADE. WHERE NO INF ORMATION GIVEN IN THE RETURN IS FOUND TO BE INCORRECT OR INACCURATE T HE ASSESSEE CANNOT BE HELD GUILTY OF FURNISHING INACCURATE PARTICULARS . IN ORDER TO EXPOSE THE ASSESSEE TO PENALTY UNLESS THE CASE IS STRICTLY COVERED BY THE PROVISION, THE PENALTY PROVISION CANNOT BE INVOKED. BY NO STRETCH OF IMAGINATION CAN MAKING AN INCORRECT CLAIM TANTAMOU NT TO FURNISHING INACCURATE PARTICULARS. THERE CAN BE NO DISPUTE TH AT EVERYTHING WOULD DEPEND UPON THE RETURN FILED BY THE ASSESSEE BECAUS E THAT IS THE ONLY DOCUMENT WHEN THE ASSESSEE CAN FURNISH THE PARTICUL ARS OF HIS INCOME. WHEN SUCH PARTICULARS ARE FOUND TO BE INACCURATE, T HE LIABILITY WOULD ARISE. TO ATTRACT PENALTY THE DETAILS SUPPLIED IN T HE RETURN MUST NOT BE ACCURATE NOT EXACT OR CORRECT NOT ACCORDING TO THE TRUTH OR ERRONEOUS. WHERE THERE IS NO FINDING THAT ANY DETAILS SUPPLIED BY THE ASSESSEE IN ITS RETURN ARE FOUND TO BE INCORRECT OR ERRONEOU S OR FALSE THERE IS NO QUESTION OF INVITING THE PENALTY UNDER SEC 271(1). A MERE MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW, BY ITSELF WI LL NOT AMOUNT TO FURNISHING INACCURATE PARTICULARS REGARDING THE INC OME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE RETURN CANNOT AMOUNT TO FU RNISHING INACCURATE PARTICULARS. ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 11 14. SIMILARLY, IN THE CASE OF PRICE WATERHOUSE CO OPERS PVT. LTD. V/S. CIT (348 ITR 306), THE APEX COURT HELD AS FOLL OWS- HELD, ALLOWING THE APPEAL, THAT THE FACTS OF THE C ASE WERE PECULIAR AND SOMEWHAT UNIQUE. NOTWITHSTANDING THAT THE ASSE SSEE WAS A REPUTED FIRM AND HAD GREAT EXPERTISE AVAILABLE WITH IT, IT WAS POSSIBLE THAT EVEN THE ASSESSEE COULD MAKE A SILL Y MISTAKE. THE FACT THAT THE TAX AUDIT REPORT WAS FILED ALONGWITH THE RETURN AND THAT IT UNEQUIVOCALLY STATED THAT THE PROVISION FO R PAYM ENT WAS NOT ALLOWABLE UNDER SECTION 40A(7) OF THE ACT INDIC ATED THAT ASSESSEE MADE A COMPUTATION ERROR IN ITS RETURN OF INCOME. THE CONTENTS OF THE TAX AUDIT REPORT SUGGESTED THAT THE RE WAS NO QUESTION OF THE ASSESSEE CONCEALING ITS INCOM E OR OF THE ASSESSEE FURNISHING ANY INACCURATE PARTICULARS. APART FROM THE FACT THAT THE ASSESSEE DID NOT NOTICE THE ERROR, IT WAS NOT EVEN NOTICED EVEN BY THE ASSESSING OFFICER WHO FRAMED THE ASSESSMENT ORD ER. ALL THAT HAD HAPPENED WAS THAT THROUGH A BONA FIDE AND INADV ERTENT ERROR, THE ASSESSEE WHILE SUBM ITTING ITS RETURN, FAILED TO ADD THE PROVISION FOR GRATUITY TO ITS TOTAL INCOME. THE ASS ESSEE SHOULD HAVE BEEN CAREFUL BUT THE ABSENCE OF DUE CARE, IN A CASE SUCH AS THE PRESENT, DID NOT MEAN THAT THE ASSESSEE WAS GUILTY OF EITHER FURNISHING INACCURATE PARTICULARS OR ATTEMPTING TO CONCEAL ITS INCOME. ON THE PECULIAR FACTS OF THIS CASE, THE IM POSITION OF PENALTY ON THE ASSESSEE WAS NOT JUSTIFIED. 15. IN THE LIGHT OF THE ABOVE DISCUSSION, WE DEL ETE THE IMPUGNED PENALTY LEVIED BY THE ASSESSING OFFICER AND CONFIRM ED BY THE CIT(A), ALLOWING THE GROUNDS OF THE ASSESSEE IN THIS APPEAL . 16. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 22.02.2013 SD/ - (SAKTIJIT DEY) SD/ - (CHANDRA POOJARI) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DT/- 22 ND FEBRUARY, 2013 COPY FORWARDED TO: 1. M/S. AGARVANSHI ALUMINUM LTD., C/O. M/S. SEKHAR &CO., CHARTERED ACCOUNTANTS, 133/4, R.P.ROAD, SECUNDERABA D. 2. DY. COMMISSIONER OF INCOME - TAX CIRCLE 1(1), HYDERABAD ITA NO.865/HYD/11 M/S. AGARVANSHI ALUMINUM LTD., SECUNDERABAD 12 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) I HYDERABAD COMMISSIONER OF INCOME - TAX I, HYDERABAD 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT HYDERABAD B.V.S.