2014 (6) TMI 81 - HC - Income Tax

Penalty as per clause (a) of Explanation 4 to section 271(1)(c) of the Act - Quantum additions confirmed Inaccurate particluars furnished MAT u/s 115JB of the Act paid - Held that - Following Commissioner of Income Tax Versus M/s. Nalwa Sons Investments Ltd. 2010 (8) TMI 40 - DELHI HIGH COURT the tax paid by the assessee before and after additions would remain exactly the same - since the Commissioner did not permit any increase in the assessee s book profit computation u/s 115JB of the Act, even after unearthing the concealed income, the assessee ended up paying the same amount of minimum alternative tax u/s 115JB of the Act even after the concealments were unearthed and accepted by the assessee - the assessee s tax liability did not change despite unearthing of concealed income, no penalty could have been levied - before and after the additions the assessee remained a MAT company and paid tax under section 115JB of the Act or such similar provision, that by itself would mean that no penalty could be imposed - If the effect of the addition of the concealed income results into higher minimum alternative tax by increasing the book profit also, penalty could as well be imposed Decided against Revenue.

Summary

Issues:
1. Whether the Appellate Tribunal erred in deleting the penalty despite confirmed quantum additions by CIT(A)?
2. Whether the Appellate Tribunal erred in not considering inaccurate particulars leading to reduced loss as income under section 271(1)(c)?

Analysis:
1. The issue involves the levy of penalty under section 271(1)(c) of the Act. The Tribunal observed that even after disputed additions, the assessee continued to pay tax on a minimum alternative basis under section 115JB of the Act. The Tribunal referred to a judgment of the Delhi High Court in a similar case and concluded that concealment, in this case, did not lead to tax evasion, hence deleting the penalty based on the precedent.

2. Another similar issue arose in a different case before the Court where the Commissioner partially allowed the assessee's appeal regarding quantum addition and held that no addition for computing book profit under section 115JB could be made. The Court expressed doubts about whether the provisions of section 115JB would prevent Revenue Authorities from making suitable additions for computing book profit. The Court highlighted that the tax liability of the assessee did not change despite the concealed income being unearthed, leading to the conclusion that no penalty could be levied in such a scenario. The Court clarified that the mere fact of the assessee remaining a MAT company and paying tax under section 115JB did not automatically preclude the imposition of a penalty if the addition of concealed income resulted in a higher minimum alternative tax.

In conclusion, the Court dismissed the Tax Appeal, emphasizing that the tax liability of the assessee remained the same even after the concealed income was discovered. The Court's decision was based on the understanding that no penalty could be imposed when the tax liability did not change despite the unearthing of concealed income.