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TMI Blog2016 (4) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... higher of the two, then concealment had no role to play and becomes totally irrelevant for imposing penalty u/s 271(1)(c) of the Act as concealment did not lead to tax evasion at all. In the present case also the assessee had paid tax on the income calculated u/s 115JB of the Act which was higher than the income calculated under normal provisions of the Act and as per the dicta laid down in the case of CIT Vs. Nalwa Sons [2010 (8) TMI 40 - DELHI HIGH COURT] in this situation penalty u/s 271(1)(c) of the Act is not leviable and thus we concur with the conclusion of the ld. CIT(A). - Decided in favour of assessee. - ITA No. 6010/Del /2013 - - - Dated:- 2-3-2016 - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Shri P. DAM Kanunjna, Sr. DR For The Respondent : Shri Ajay Wadhwa, Adv ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal filed by the Revenue is directed against the order of the CIT(A)-VIII, New Delhi, dated 27/08/2013 passed in first appeal No. 64/12-13 for A.Y 2007-08. 2. The grounds raised by the revenue read as under: 1. Whether on the facts and circumstances of the case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO to delete the penalty. 5. Now the aggrieved Revenue is before this Tribunal in this second appeal with the ground as reproduce hereinabove. 6. At the very outset, the ld. AR pointed out that the assessee challenged the assessee validity of penalty before the ld. CIT(A) in Ground No. 4 as per copy of Form No. 35, by alleging that the same has been passed beyond the prescribed limitation period as mandated by section 275(1)(a) of the Act, therefore, the same is not sustainable being time barred. 7. The ld. AR also pointed out that the assessee has not filed any cross appeal or cross objection but as per Rule 27 of the IT(AT) Rules, 1963, the assessee can raise legal objection which can be decided on the facts and evidence already on record without filing any cross appeal or cross objection and the assessee respondent may support the order appealed against on any of the grounds decided against him. For this proposition, the ld. AR submitted that the ITAT dismissed the appeal of the Revenue by passing order dated 23.12.2011 and the AO initiated penalty proceedings by issuing notice dated 10.10.2012 and passed impugned penalty order in a hasty manner on 30.10.2012 without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the proposition laid down by various Hon'ble High Courts in said decisions held as follows: 10. Before we proceed further, it is necessary to clear this point, namely, whether the assessee can raise these points before the Tribunal for the first time as a respondent defending the order of the CIT(A) which was based on the only question whether the reasons recorded by the Assessing Officer amounted to reason to believe or reason to suspect. The matter is not res integra. Rule 27 of the Appellate Tribunal Rules, says that the respondent in an appeal can support the order appealed against on any of the grounds decided against him even though he may not have filed an independent appeal or cross-objection. This Rule clearly supports the assessee. In the present case, the assessee has raised the point of non-recording of reason in ground No. 2 before the CIT(A) though this ground is not so categorical as the Ld. Counsel for the assessee wants us to read. Even so, such ground can be inferred from the fact that the assessee has been repeatedly asking for the reasons recorded which were not supplied to her. Even before the Tribunal right from September, 2004, the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Bombay High Court while pointing out the difference between an appellant and respondent before the appellate court, observed at page 55 that the respondent may support the decision of the trial court, not only on the ground contained in the judgment of the trial court, but on any other ground . Later, in the case of B.R. Bamasi v. CIT , the Bombay High Court which was dealing with the case of right of the respondent to defend the order appealed against held that the respondent would be entitled to raise a new ground in defence of the order appealed against, provided it is a ground of law and does not necessitate any other evidence to be recorded, the nature of which would not only be a defence to the appeal itself, but may also affect the validity of the entire assessment proceedings. It was further held that the ground served as a weapon of defence against the appeal and, if accepted should not place the appellant in a worse than he would have been, had he not appealed. In CIT v. Gilbert and Barkar Mfg. Co. , the Bombay High Court made no distinction between the appellant and respondent in an appeal before the Tribunal and held that both were entitled to raise new points o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssues decided against him and was legally empowered to challenge that order by way of filing cross objection or cross appeal and which was not filed considering the ultimate favourable conclusion and to put an end to the controversy with a view point to avoid litigation and legal expenses and to buy peace of mind. The words though he may not have appealed mentioned in Rule 27 have been used for the respondent, and this Rule provides a validly evocable right to the respondent who did not file any cross objection or appeal against the observation or conclusion of an order which was conclusively in his favour due to above noted reasons or situations to save him from the sword of loser party which is agitating the final conclusion of the ld. CIT(A) favouring the opponentrespondent before the Tribunal. However, we may point out that Rule 27 does not create any right in favour of a respondent where he is otherwise not eligible or debarred from filing cross appeal or cross objection. Meaning thereby, if the respondent does not validly have right to file cross appeal or cross objection, then Rule 27 cannot create any right in favour of the respondent enables him to challenge the conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT-DR is not tenable in this regard and the assessee is allowed to raise legal objection regarding limitation alleging penalty order as time barred under provisions of section 275(1)(a) of the Act. 15. While we consider the legal objection of the assessee that the impugned penalty order is time barred, then from the facts as we have already note hereinabove, it is apparent that the Tribunal passed order on 23.12.2011 which was received by the Commissioner [Judicial] dated 23.4.2012 and the penalty order has been passed on 30.10.2012 i.e. within six months from the end of the month in which the Commissioner received copy of the order of the Tribunal which provoked the AO to initiate penalty proceedings. Thus, we are unable to agree with the legal contention of the ld. AR that the impugned penalty is time barred. Our above noted conclusion also gets strength from the decision of Hon'ble High Court of Delhi in the case of CIT Vs. Mohair Investment reported as 345 ITR 51 [Del]. 16. Per contra, it is vivid from the dates as noted above by us that the ld. CIT [J] received copy of the Tribunal order dated 23.4.2012 and from the end of April 2012 six months period was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il] No. 1420/2009 order dated 04-05-2012, filed by the department in the case of Nalwa Sons Investment Ltd [supra] vide order dated 04.05.2012. 19. On careful consideration of the above rival submissions, at the very outset, from the order of the Hon'ble Jurisdictional High Court in the case of Nalwa Sons Investment Ltd [supra] which has been confirmed by the Hon'ble Supreme Court, we observe that the Hon'ble Jurisdictional High Court has upheld the order of the Tribunal which confirmed the order of the ld. CIT(A) by which the AO was directed to delete the penalty. In the present case before us, the AO assessed the income under normal provisions of the Act at ₹ 13,69,104/- on which no exemption u/s 88E of the Act. However, the AO had calculated tax payable by the assessee at ₹ 1,76,040/- under the normal provisions of the Act and calculated tax payable u/s 115JB of the Act at ₹ 47,28,060/- which was duly paid by the assessee. While granting relief to the assessee, the ld. CIT(A) has placed reliance on the judgment of the Hon'ble High Court of Delhi dated 26.08.2010 passed in ITA No. 1420/2009 in the case of CIT Vs. M/s Nalwa Sons Investment Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or a minus figure. Therefore, even during the period between 1.4.1976 to 1.4.2003 the position was that the penalty was leviable even in a case where addition of concealed income reduces the returned loss. When the word income is read to include losses as held in Harprasad s case (supra) it becomes crystal clear that even in a case where on account of addition of concealed income the returned loss stands reduced and even if the final assessed income is a loss, still penalty was leviable thereon even during the period 1.4.1976 to 1.4.2003. Even in the Circular dated 24.7.1976, referred to above, the position was clarified by Central Bureau of Direct Taxes (in short CBDT‟). It is stated that in a case where on setting off the concealed income against any loss incurred by the assessee under any other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case the tax sought to be evaded will be tax chargeable on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x chargeable not as if it were the total income. Once, we apply this rationale to Explanation 4 given by the Supreme Court, in the present case, it will be difficult to sustain the penalty proceedings. Reason is 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. On the contrary, it is the deemed income assessed under Section 115 JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under Section 115 JB of the Act. Hence, when the computation was made under Section 115 JB of the Act, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. 26. The upshot of the aforesaid discussion would be to sustain the order of the Tribunal, though on different grounds. Therefore, while we do not agree with the reasoning and approach of the Tribunal, for our reasons disclosed above, we are of the opinion that penalty could not have been imposed even in respect of claim of depreciation made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elled. 21. In view of the above, when we vigilantly peruse the order of the Hon'ble High Court in the case of Nalwa Sons Investment [supra], then we note that their Lordships speaking for the Hon'ble Jurisdictional High Court of Delhi clearly held that there was concealment but that had its repercussions only when the assessment was done under normal provisions and procedure of the Act which were not acted upon. Their Lordships further held that in a situation when the deemed income is assessed u/s 115JB of the Act which has become the basis of assessment as it was higher of the two i.e. income calculated under normal provisions and income assessed u/s 115JB of the Act and thus tax has been paid on the income assessed u/s 115JB of the Act which is higher of the two, then concealment had no role to play and becomes totally irrelevant for imposing penalty u/s 271(1)(c) of the Act as concealment did not lead to tax evasion at all. In the present case also the assessee had paid tax on the income calculated u/s 115JB of the Act which was higher than the income calculated under normal provisions of the Act and as per the dicta laid down by the Hon'ble High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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