2017 (6) TMI 445 - AT - Income Tax

Penalty u/s 271(1)(c) - Held that - It is evident from the record that the returned income and assessed income under normal provisions have been computed as Nil after set-off of unabsorbed depreciation and brought forward business losses. The quantum addition of ₹ 69.63 Lacs has resulted into adjustment in the figures of unabsorbed depreciation & brought forward business losses. The tax payable figures of ₹ 1.07 crores on book profits u/s 115JB has been accepted by the revenue as evident from Income Tax Computation Form issued pursuant to assessment u/s 143(3). Thus penalty deleted. - Decided in favour of assessee.

Summary

Issues involved:
Appeal against penalty under section 271(1)(c) of the Income Tax Act, 1961 for Assessment Year 2010-11.

Analysis:

Issue 1: Timeliness of the appeal filing
The appeal was initially noted as time-barred by 17 days, but the Assessee's Counsel clarified that the appeal was filed within the statutory period of 60 days from the date of communication of the order. The Counsel rectified the error in the appeal form, and the Delay was deemed inadvertent. The Delay was condoned, and the appeal proceeded on merits.

Issue 2: Penalty imposition for inaccurate particulars of income
The Assessee, a resident corporate entity in financial services, was assessed for AY 2010-11 at a 'Nil' income under normal provisions after set-off of losses. The penalty of ?16,65,513 was imposed for claiming expenses related to an increase in authorized share capital as capital in nature, leading to inaccurate particulars of income. The Assessee contended that since it paid tax on book profits under section 115JB, higher than normal profits, no penalty should be levied. However, the CIT(A) upheld the penalty.

Issue 3: Application of CBDT circular and Delhi High Court judgment
The Assessee relied on a CBDT circular post the Delhi High Court's decision, stating that if tax payable on normal income is less than on book profits u/s 115JB, no penalty should be imposed. The Assessee's returned income was 'Nil' under normal provisions, and the tax liability remained the same despite the quantum additions. The revenue argued that the expenses claimed were capital in nature, affecting the Book Profits under 115JB.

Judgment:
The Tribunal analyzed the CBDT circular and the Delhi High Court's decision, noting that the revenue had accepted the tax payable on book profits. As the Assessee's case aligned with the circular and the judicial precedent, the penalty was deleted, and the appeal was allowed, benefiting the Assessee.