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2013 (10) TMI 1068 - AT - Income TaxPenalty u/s 271(1)(c) - Recasting of deduction u/s 80IB - Held that - The AO in the assessment made u/s 144/147 of the Act on 31.2.2009 reduced the claim u/s 80IB of the Act by Rs.233,67,497/- and thereafter levied penalty u/s 271(1)(c) of the Act on the assessee for furnishing of inaccurate particulars of income being 100% of the tax sought to be evaded amounting to Rs.85,50,751/- which was deleted by the ld.CIT(A) on appeal filed by the assessee. The ld. CIT(A) observed that deduction u/s 80IB of the Act was claimed by the assessee because the return of income for A.Yr.2005-06 was filed by the assesee in 2005. The deduction u/s 80IB of the Act was claimed by the assessee on the basis of relief granted to the assessee in A.Yr.2004-05 by the ld. CIT(A) - where the income computed in accordance with the normal procedure is less than the income determined by local fiction, namely, the book profits u/s 115JB of the Act and the income of the assessee is assessed u/s 115JB of the Act and not under the normal provision, the tax is paid on the income assessed u/s 115JB of the Act. Concealment of income would have no role to play and would not lead to tax evasion therefore, penalty cannot be imposed on the basis of the disallowance or additions made under regular provision - Following decision of CIT vs Nalwa Sons Investment Limited 2010 (8) TMI 40 - DELHI HIGH COURT - Decided against Revenue.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Legality of the penalty imposed under Section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. Detailed Analysis: Condonation of Delay: The Revenue's appeal was filed with a delay of 14 days. The Tribunal found the reason for the delay plausible and condoned the delay, admitting the appeal for hearing. Penalty under Section 271(1)(c): The core issue of the appeal was whether the CIT(A) erred in cancelling the penalty of Rs. 85,50,751/- imposed under Section 271(1)(c) of the Income Tax Act for furnishing inaccurate particulars of income. Facts of the Case: - The original assessment was completed under Section 143(3) on 26.12.2007, determining the total income as "NIL" after allowing a deduction under Section 80IB of Rs. 6,38,69,857/-. Taxes were determined under Section 115JB based on book profit of Rs. 9,50,88,243/-. - Reassessment proceedings under Section 147 were initiated on 16.10.2008 because certain receipts (DEPB & DFRC Credit of Rs. 1,93,79,010/- and interest on Fixed Deposit of Rs. 39,88,487/-) were not excluded while allowing the deduction under Section 80IB. - The reassessment reduced the deduction under Section 80IB by Rs. 2,33,67,497/-, but the tax was still assessed based on the same book profit under Section 115JB. Penalty Proceedings: - Penalty proceedings under Section 271(1)(c) were initiated, and a penalty of Rs. 85,50,751/- was imposed for furnishing inaccurate particulars of income. - On appeal, the CIT(A) deleted the penalty, observing that the assessee had disclosed all relevant particulars in the return and there was no concealment of income. CIT(A)'s Observations: 1. The assessee filed its return declaring total income as per normal computation and also paid tax under MAT as per Section 115JB. 2. The reassessment under Section 147 was initiated on the grounds that the export incentive and FD interest were not part of the eligible profits for deduction under Section 80IB. 3. The CIT(A) noted that the assessee's claim for deduction was based on the relief granted in the earlier assessment year and was not a case of concealment or furnishing inaccurate particulars. 4. The CIT(A) referred to the Supreme Court's judgment in CIT vs. Reliance Petroproducts Pvt. Ltd., which held that merely making an incorrect claim does not amount to furnishing inaccurate particulars of income. 5. The CIT(A) also noted that the tax sought to be evaded was incorrectly computed by the AO because the assessee paid tax under Section 115JB, and the reassessment did not change the tax liability under this section. Tribunal's Findings: - The Tribunal upheld the CIT(A)'s decision, noting that the deduction under Section 80IB was claimed based on the prevailing understanding and relief granted in earlier years. - The Tribunal referenced the Delhi High Court's decision in CIT vs. Nalwa Sons Investment Limited, which held that penalty cannot be imposed when the tax is paid on book profits under Section 115JB, even if there are disallowances under the normal provisions. - The Supreme Court had dismissed the SLP against the Delhi High Court's decision, reinforcing that penalty under Section 271(1)(c) is not applicable when tax is paid under Section 115JB. Conclusion: The Tribunal found no justification to interfere with the CIT(A)'s order and confirmed the deletion of the penalty. The appeal of the Revenue was dismissed. Order Pronounced: The order was pronounced in court on 11.06.2013.
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