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TMI Blog2016 (7) TMI 579X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 16-02-2006 and 13-12-2006 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ("Act"). Penalties under dispute were levied by the ACIT, Circle- 9(1) u/s 271(1) (c) of the Act vide his orders, both dated 24-03-2011. At the outset, the learned Counsel for the assessee stated that the facts and circumstances are exactly identical in both the years in regard to levy of penalty by the AO u/s 271 (1) (c) of the Act. Identical grounds are raised by the assessee and identical orders are passed by the CIT (A), hence, we pass this consolidated order for the sake of convenience. 2. The only issue in these appeals of assessee is as regards to the orders of CIT (A) confirming levy of penalties u/s 271 (1) (c) of the Act on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laneous exp. Rs. 60,000/- ii) Addition u/s 35D Rs.73,57,252/- iii) Provision for leave encashment Rs. 2,73,003/- iv) Provision for gratuity Rs. 6,53,688/- 4. Learned Counsel for the assessee before us explained that the CIT (A) has deleted the levy of penalty in respect to other additions and only confirmed the penalty in respect to these two items i.e. provision for leave encashment and provisions for gratuity added by the AO while computing book profit u/s 115JB of the Act. The AO levied penalty for the simple reason that the assessee has not added back the provisions to the book profit despite the fact that these liabilities have not accrued or ascertained during the year. Aggrieved, the assessee preferred appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 115JB 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 115JB of the Act. Hence, when the computation was made under Section 115JB of the Act, the aforesaid concealment had no role to play and was totally irrelevant. Therefore, the conceal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but tax levied under MAT provisions u/s 115JB/115JC, for cases prior to A.Y. 2016-17-reg.- Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act 2000 with effect from 1-4-2001. 2. Under clause (iii) of sub-section (1) of section 271 of the Act, penalty for concealment of income or furnishing inaccurate particulars of income is determined based on the "amount of tax sought to be evaded" which has been defined inter-alia, as the difference between the tax due on the income assessed and the tax which would have been chargeable had such total income been reduced by the amount of concealed income or income in respect of which inaccurate particulars had been filed. 3. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases prior to 1.4.2016, if any adjustment is made in the income computed for the purpose of MAT, then the levy of penalty u/s 271(1)(c) of the Act, will depend on the nature of adjustment. 6. The above settled position is to be followed in respect of section 115JC of the Act also. 7. Accordingly, the Board hereby directs that no appeals may henceforth be filed on this ground and appeals already filed, if any, on this issue before various Courts/Tribunals may be withdrawn/not pressed upon. This may be brought to the notice of all concerned. 7. In term of the above, we delete the impugned penalties levied by the AO and confirmed by the CIT(A). Accordingly, we allow these appeals of the assessee. 8. In the result, both the appeals of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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