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2013 (10) TMI 881 - HC - Income TaxPenalty u/s 271(1)(c) of the Income Tax Act, when assessee was assessed and had paid tax under MAT provisions Held that - Reliance has been placed upon the decision of the Delhi High Court in Commissioner of Income Tax versus Nalwa Sons Investments Limited, 2010 (8) TMI 40 - DELHI HIGH COURT wherein it has been held that when taxable income is computed on book profits under Section 115JB and not under the normal provisions, Explanation (4) has to be accordingly applied. In view of the said Explanation, the additions made by the Assessing Officer under the normal provisions are totally irrelevant - Thus, there cannot be imposition of penalty under Section 271(1)(c) of the Act for addition made under the normal provisions Decided in favor of Assessee.
Issues:
Assessment under Section 115JB of the Income Tax Act, 1961; Imposition of penalty under Section 271(1)(c) for inaccurate particulars furnished. Analysis: The case involves an appeal under Section 260A of the Income Tax Act, 1961, for Assessment Year 2005-06 arising from a tribunal's order. The substantial question of law framed was whether the penalty under Section 271(1)(c) is justified when the appellant-assessee was assessed and paid tax under Minimum Alternative Tax (MAT) provisions. The appellant-assessee had reported a loss under normal provisions but earned a profit under Section 115JB. The Assessing Officer disallowed a donation claimed as expenditure, leading to penalty proceedings under Section 271(1)(c). The appellant argued that the donation was given to charitable organizations and was assessable under Section 80G, claiming it was an inadvertent error in not adding back the amount while computing taxable income. The Commissioner (Appeals) confirmed the penalty, which was upheld by the tribunal. However, relying on the decision in Commissioner of Income Tax versus Nalwa Sons Investments Limited, it was held that under Section 115JB, Explanation (4) must be applied, making additions under normal provisions irrelevant for penalty imposition. The court found in favor of the appellant-assessee, citing the application of Explanation (4) under Section 115JB and the irrelevance of additions made under normal provisions for penalty purposes. The judgment answered the question of law in favor of the appellant-assessee, leading to the disposal of the appeal with no costs imposed.
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