2013 (6) TMI 472 - AT - Income Tax

Penalty u/s 271 (1) (c) - not including provision for doubtful debts and advances in the book profit u/s 115JB - CIT(A) deleted the addition - Held that - Additions in the cases of assessee were confirmed due to retrospective amendment in the provisions of section 115JB and CIT (A) has very categorically made his findings and has deleted the penalties as per law. The reliance put by the DR on different case laws do not match with the facts and circumstances of present case as the present cases relates to calculation of profits u/s 15JB wherein the assessee had excluded provisions for diminution in the value of assets from profits u/s 115JB on the basis of judicial rulings which were in favour of assessee and, therefore, facts of the present cases are different from the facts and cases relied upon by DR. No infirmity in the orders passed by the CIT (A). Therefore, the appeals filed by Revenue are dismissed.

Summary

Issues involved:
Deletion of penalty under section 271(1)(c) by CIT (A) for assessment years 2005-06 & 2006-07.

Analysis:
1. The main issue in this case pertains to the deletion of penalties under section 271(1)(c) by the Commissioner of Income Tax (Appeals) for the assessment years 2005-06 & 2006-07. The Revenue filed appeals against the orders of the Commissioner of Income Tax (Appeals) regarding the deletion of penalties imposed under section 271(1)(c) of the Income Tax Act.

2. The brief facts of the case reveal that the assessee, engaged in the business of manufacturing and trading of earthmoving and material handling equipment, had not added back provisions made for doubtful debts or advances and for Obsolete Stock while computing profits under section 115JB of the Income Tax Act. The Assessing Officer (AO) made adjustments to the book profits and initiated penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars.

3. The Commissioner of Income Tax (Appeals) deleted the penalties imposed by the AO after considering the submissions of the assessee. The Commissioner noted that the appellant had declared book profit under section 115JB without including provisions for doubtful debts and advances based on various judicial pronouncements available at the time of filing the return. The Commissioner relied on judgments that favored the assessee's position regarding the treatment of provisions for diminution in the value of assets.

4. The Revenue, aggrieved by the Commissioner's decision, argued that the provisions of section 32 and 36 required actual write-offs in the books of accounts, and evidence for doubtful debts was not filed. The Revenue cited various case laws to support its contentions.

5. The appellant, on the other hand, contended that the returns were filed before the amendments in section 115JB came into effect and that the additions were confirmed due to retrospective amendments in the Act. The appellant also argued that the case laws cited by the Revenue did not align with the facts of the present case.

6. The Tribunal, after hearing both parties and examining the material on record, found that the additions in the assessee's case were confirmed due to retrospective amendments in section 115JB. The Tribunal held that the Commissioner had correctly deleted the penalties as per law and that the case laws cited by the Revenue did not match the facts and circumstances of the present case.

7. Consequently, the Tribunal dismissed the appeals filed by the Revenue, upholding the decision of the Commissioner of Income Tax (Appeals) to delete the penalties under section 271(1)(c) for the assessment years 2005-06 & 2006-07.