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2023 (11) TMI 742 - AT - Income TaxPenalty u/s 271(1)(c) - difference between the income declared in the return by the assessee under the provisions of section 115JB of the Act and income assessed by the Ld. AO - HELD THAT - It is not in dispute that the assessee company is a Public Sector Undertaking engaged in the business of generation of power. Therefore, no malafide intention can easily be attributed to the company that it has consciously furnished inaccurate particulars of income in filing the return. We cannot be oblivious of the fact that the assessee is not a private businessman but it is a Govt. statutory organisation. No such allegation is justified in the absence of reliable evidence in support thereof. There is no such evidence forthcoming from the records except the bald statement of the Ld. AO which is bereft of any material on facts or in law establishing malafide intention on the part of the assessee. Element of conscious furnishing of inaccurate particulars of income by the assessee is absolutely lacking. Reliance on various decisions by the CIT(A) is off the mark. The income declared by the assessee in the revised return under the normal provisions of the Act is the same as assessed by the Ld. AO. It is testimony of the bonafide intention of the assessee to file return reflecting the true state of affairs of the company. Difference between the income declared in the return by the assessee under the provisions of section 115JB of the Act and income assessed by the Ld. AO is attributable to adjustment of provision for ex-gratia leave salary, gratuity and that of provision for doubtful debts. Record reveals that in quantum appeal the held that provision for ex gratia leave salary is an ascertained liability which can not be adjusted while working out the book profit under section 115JB of the Act reversing the finding of the Ld. CIT(A) in this regard .Finding (supra) of the Tribunal has been overlooked by the Ld. AO/CIT(A) for the purpose of levy of penalty under section 271(1)(c) of the Act. This is not fair. No penalty for furnishing of inaccurate particulars of income is exigible if the disallowance itself has been deleted by the Tribunal in quantum appeal. As regards the disallowance on account of provision for doubtful debts under the provisions of section 115JB of the Act, confirmed by the Tribunal in the decision (supra) in quantum appeal, it is observed that the Tribunal confirmed the said disallowance due to retrospective amendment in law brought by the Finance (No.2) Act, 2009 w.e.f 01.04.2001. It is thus obvious that at the time when the assessee company filed its return for the AY 2005-06 on 31.10.2005 and revised return on 23.05.2006, the amended law introduced in the statute book by the Finance (No.2) Act, 2009 w.e.f. 1st April, 2001 had not come into existence. No penalty can be levied on the addition/disallowance made on the basis of retrospective amendment under the law. Thus as relying on Eastern India Powertech Ltd 2014 (11) TMI 374 - ITAT DELHI , M/S DCM SHRIRAM CONSOLIDATED LTD., 2012 (7) TMI 941 - ITAT DELHI , M/S. CHAMBAL FERTILISERS CHEMICALS LTD. 2014 (10) TMI 152 - ITAT JAIPUR levy of the impugned penalty by the Ld. AO and confirmation thereof by the Ld. CIT(A) is wholly unwarranted, unjustified and is unsustainable on merits. Decided in favour of assessee.
Issues involved: Appeal against penalty under section 271(1)(c) for furnishing inaccurate particulars of income for AY 2005-06.
Summary: Issue 1: Penalty under section 271(1)(c) for furnishing inaccurate particulars of income: The assessee, a Govt. enterprise engaged in power generation, filed return for AY 2005-06 declaring income of Rs. 16,43,97,948/-. Penalty proceedings were initiated for inaccuracies under section 115JB of the Act. Assessee contended no attempt to file inaccurate particulars, citing lack of provision for certain adjustments at the time of filing. AO imposed penalty upheld by CIT(A). Issue 2: Justification for penalty imposition: Assessee's argument that adjustments made were suo-moto in revised return and retrospective amendments in law were not in place during filing was presented. Assessee's status as a Public Sector Undertaking was highlighted to show lack of malafide intention. Various ITAT decisions were cited to support the case. Issue 3: Tribunal's analysis and decision: Tribunal noted the absence of malafide intention due to the nature of the assessee being a Govt. entity. The income declared by the assessee was accepted by the AO under normal provisions. Discrepancies in income under section 115JB were due to certain adjustments, including provisions for ex-gratia leave salary and doubtful debts. Tribunal found penalty imposition unwarranted and unsustainable, vacating the orders of AO and CIT(A) and allowing the assessee's appeal. Separate Judgment: No separate judgment was delivered by the judges in this case.
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