2016 (4) TMI 1200 - AT - Income Tax

Penalty under section 271(1)(c) - tax liability of the assessee determined on the basis of book profit under section 115JB - Held that - The income of the assessee for the year under consideration has finally been assessed on the basis of book profit under section 115JB and the ld. D.R. has not disputed this position. In the case of Nalwa Sons Investments Limited (2010 (8) TMI 40 - DELHI HIGH COURT ) relied upon by the assessee held that even though concealment is detected in the computation of income as per the normal provisions of the Act, concealment penalty cannot be imposed when the ultimate tax liability of the assessee is determined on the basis of book profit under section 115JB. The ratio of this decision in the case of Nalwa Sons Investments Limited thus is squarely applicable to the facts involved in the case of the assessee and we find no infirmity in the impugned order of the ld. CIT(Appeals) cancelling the penalty imposed by the Assessing Officer under section 271(1)(c) - Decided in favour of assessee

Summary

Issues:
Revenue's appeal against the cancellation of penalty under section 271(1)(c) by the ld. CIT(Appeals) based on the application of the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited.

Analysis:

1. Background and Assessment: The appeal was filed by the Revenue against the cancellation of a penalty under section 271(1)(c) by the ld. CIT(Appeals). The assessee, a company engaged in share broking, filed its return declaring total income. The Assessing Officer made additions to the total income under sections 94(7) and 14A. The final tax liability was determined based on Minimum Alternate Tax (MAT) under section 115JB. Penalty proceedings were initiated, but the assessee argued that since the tax liability was based on MAT, there was no additional tax liability, citing a decision of the Hon’ble Delhi High Court.

2. Assessing Officer's Position: The Assessing Officer did not accept the assessee's contention, stating that a fresh assessment was made under section 153A, and the income was assessed as per the normal provisions of the Act, not on the basis of book profit under section 115JB. Consequently, a penalty was imposed under section 271(1)(c) for the additions made to the total income.

3. Appeal before CIT(Appeals): The assessee challenged the penalty before the ld. CIT(Appeals), arguing that the additions made were already deleted, and the income was eventually determined based on book profit under section 115JB. The ld. CIT(Appeals) accepted this argument, canceling the penalty based on the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited.

4. Tribunal's Decision: The Tribunal heard both sides and noted that the income was finally assessed based on book profit under section 115JB, as per the submissions of the assessee. The Tribunal upheld the ld. CIT(Appeals)'s decision, citing the Hon’ble Delhi High Court's ruling in Nalwa Sons Investments Limited, which stated that concealment penalty cannot be imposed when the ultimate tax liability is determined based on book profit under section 115JB. No conflicting decisions from higher courts were presented, leading to the dismissal of the Revenue's appeal.

5. Conclusion: The Tribunal upheld the ld. CIT(Appeals)'s decision to cancel the penalty imposed by the Assessing Officer under section 271(1)(c) based on the application of the decision of the Hon’ble Delhi High Court in the case of Nalwa Sons Investments Limited. The appeal of the Revenue was dismissed.