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TMI Blog2011 (1) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... no tax sought to be evaded because the addition in respect of which penalty was imposed was made while computing total income under the normal provisions of the Act and ultimately the total income of the Assessee was determined on the basis of book profits u/s.115JB of the Act - Cancel the penalty imposed by the Assessing Office - Appeals by the Assessee are allowed. - I.T.A. No.6940/Mum/2008, I.T.A. No.6941/Mum/2008 - - - Dated:- 21-1-2011 - Shri N. V. Vasudevan, Shri T.R. Sood, JJ. Appellant by : Shri Bhupendra Shah Respondent by : Shri Jitendra Yadav O R DE R Per N. V. Vasudevan (JM) : I.T.A. No.6940/Mum/2008 A.Y. 2003-04 I.T.A. No.6941/Mum/2008 A.Y. 2005-06 both these appeals are raised by the assessee ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 115 JB of the Act. The position in this regard can be summarised as follows:- Assessment Year : 2003-04 Particulars Income as per original return Income as per return after Search As per assessment order u/s. 153 A Business Income Rs.1,52,32,341/- Rs.1,52,32,341/- Rs.1,52,32,341/- Add- Addl. Income towards loose paper no.23 of Annexure A-15 offered for tax Rs.12,00,000/- Rs.12,00,000/- Less: Set off of b/f losses Rs.1,52,32,341/- Rs.1,64,32,341/- Rs.1,64,32,341/- Total Income Rs. NIL Rs.NIL Rs.NIL Book Profit u/s.115JB Rs.19,88,912/- Rs.19,88,912/- Rs.19,88,912/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered during the course of search proceedings on adhoc basis and just to cover up such amount without going for retraction, income was offered on every loose paper which was even slightly doubled upon. b. Such surrender was made to buy peace of mind and to avoid litigation without taking any credit in the books of accounts. c. Even after additional income so surrendered and assessed, no tax was payable by the appellant due to carry forward business losses and depreciation of earlier years and only book profit was taxable u/s. 115 JB of the Act. d. The surrender was made based on noting on loose papers (Annexure A-15) which cannot be considered as detection of concealed income by the department in the background of total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court. The Hon ble Court held as follows:- The judgment of the Supreme Court in Gold Coin Health Food (P) Ltd s case(supra) clarifies that even if there are losses in a particular year, penalty can be imposed, as even in that situation there can be a tax evasion. As per section 271(1)(c), the penalty can be imposed when any person has concealed the particulars of his income or has furnished incorrect particulars of the income. Once this condition is satisfied, quantum of penalty is to be levied as per clause (iii) of section 271(1) which stipulates that the penalty shall not exceed three times of the amount of tax sought to be evaded . The expression the amount of tax sought to be evaded has been clarified and explained in the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om earlier years, the total income is reduced to a figure lower than the concealed income or even is a minus figure. The Court was of the opinion that the tax sought to be evaded will mean the tax chargeable not as if it was the total income. Once this rationale given by the Supreme Court to the Explanation 4 was applied to the instant case, it would be difficult to sustain the penalty proceedings. Reason was simple. No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon in the instant case. On the contrary, it was the deemed income assessed under section 115JB which had become the basis of assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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