2012 (7) TMI 941 - AT - Income Tax

Levy of penalty u/s. 271(1)(c) - provision for bad and doubtful debts adjustment under MAT computation - Held that - As decided in assessee own case for previous AY no adjustment was required to be made for provision for bad and doubtful debts under clause (c) of the Explanation to Section 115JB. In these circumstances, we feel the Tribunal was justified in accepting and holding that the case is covered by Explanation 1 Clause (B) to Section 271(1) and had correctly dismissed the appeal of the Revenue deleting the penalty - Decided against revenue

Summary

Issues:
Levy of penalty u/s. 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal pertains to the confirmation of the penalty under section 271(1)(c) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (A). The assessee company had filed a return of income for the assessment year 2005-06, showing total income and tax payable under normal provisions and section 115JB of the IT Act. The Assessing Officer disallowed certain deductions and made additions, including provision for doubtful debts. The Ld. Commissioner of Income Tax (A) deleted some additions, including the one related to provision for doubtful debts, which led to the imposition of a penalty by the Assessing Officer. The Ld. Commissioner of Income Tax (A) reasoned that the tax liability of the assessee would not have been affected had it shown book profits as computed by the Assessing Officer, considering a retrospective amendment to section 115JB. The Ld. Commissioner also noted the deletion of a penalty in a previous year for a similar addition to book profits u/s. 115JB.

The Revenue challenged the order before the ITAT, Delhi. The Tribunal considered the submissions and records, noting that similar additions were made in previous assessment years where the penalty was deleted. Citing a precedent where the Hon'ble High Court confirmed the deletion of penalty due to a retrospective amendment, the Tribunal upheld the order of the Ld. Commissioner of Income Tax (A) and dismissed the Revenue's appeal. The Tribunal emphasized that the case fell under Explanation 1 Clause (B) to Section 271(1) and no substantial question of law arose. Consequently, the penalty was deleted based on the precedents and the order of the Ld. Commissioner of Income Tax (A).

In conclusion, the ITAT confirmed the deletion of the penalty imposed by the Assessing Officer, following the precedent set by previous decisions. The appeal filed by the Revenue was dismissed, and the order was pronounced in open court on the specified date.