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2019 (2) TMI 1372 - AT - Income TaxPenalty u/s 271(1)(c) - assessee has been assessed on MAT as per the provision of the section 115JB - HELD THAT - It is not in dispute that the original assessment as well as reassessment has been computed at nil income and the tax paid by the assessee is on book profit u/s 115 JB of the Act. In our considered opinion the facts of the case in hand clearly show that this is not a fit case for levy of penalty u/s 271 (1) (c) of the Act. Levy of penalty u/s 271 (1) (c) of the Act is not justified accordingly the order of the CIT(A) is upheld and appeal filed by the revenue is dismissed.
Issues:
Appeal against deletion of penalty under section 271(1)(c) of the Income Tax Act. Analysis: The appeal pertains to the deletion of a penalty of ?31,99,806 imposed by the Assessing Officer under section 271(1)(c) of the Act for the assessment year 2004-05. The original assessment was completed, and later reopened due to a provision for operating expenses not fully added back to income. The reassessment resulted in a nil taxable income, computed under Minimum Alternate Tax (MAT) provisions of section 115JB of the Act. The penalty was imposed on the balance amount of the provision added during reassessment. The CIT(A) deleted the penalty based on the assessee's explanation and a precedent from the Supreme Court. The main contention was whether the penalty under section 271(1)(c) was justified when the tax paid was based on book profit under section 115JB of the Act. The authorities considered that since both original and reassessment resulted in nil income, and the tax paid was under MAT provisions, the penalty was not warranted. Reference was made to a circular by the CBDT, highlighting that penalty under section 271(1)(c) is not attracted when tax payable under normal provisions is less than that under MAT provisions. The circular clarified the position before and after a specific amendment, emphasizing that penalty depends on the nature of adjustments made in the income computed for MAT purposes. Based on the CBDT circular and legal precedents, the Tribunal upheld the CIT(A)'s decision to delete the penalty. It was concluded that the levy of penalty under section 271(1)(c) was not justified in this case, and the appeal by the revenue was dismissed. The judgment clarified the application of penalties in cases involving MAT provisions and emphasized adherence to the CBDT circular for determining the appropriateness of penalties under the Income Tax Act.
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