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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 ..... than the tax payable on the book profit under MAT provisions of the Act, then penalty u/s. 271(1) ( c) of the Act is not attracted with reference to additions/disallowances made under the normal provisions of the Act. The CBDT has clarified that in cases 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. The CBDT has also directed the revenue authorities that no appeal may henceforth be filed on this ground and appeals already filed, if any, on this issue before various courts/tribunals may be withdrawn or not pressed upon. Thus penalties deleted - Decided in favour of assessee - ITA No.7418 and 7419/Mum/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of manufacturing and trading in textile suiting and shirting fabrics. The AO, during the course of assessment proceedings, while observing from the accounts of the assessee, noticed that the assessee made provisions of ₹ 2,73,007/- on account of leave encashment and provisions for gratuity amounting to ₹ 6,90,677/-. According to the AO, these provisions are not made on the basis of actuarial provisions as per Accounting Standard-9 (AS-9). According to the AO, the method adopted by the assessee, for exact valuation of liabilities, was not scientific one and the liability on these two counts cannot be said to have accrued during the year. Accordingly, AO has not touched the normal computation of business profit and accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, the assessee preferred appeal before the CIT (A), who also confirmed the levy of penalty by relying on the decision of the Hon ble Supreme Court in the case of CIT Vs. Nalwa Sons Investment Ltd. [(2012) 21 taxmann.com 184 (SC)]. Aggrieved against the order of the CIT (A), confirming the levy of penalty, the assessee came in second appeal before the Tribunal. 5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that this issue is squarely covered in favour of assessee and not the department as held by CIT(A). Ld. Counsel taken us through judgment of Hon ble Supreme Court in the case of Nalwa Sons Investment Ltd.(supra) , wherein the Hon ble court has dealt with the issue of levying o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. 6. We find that the CBDT has issued circular no. 25/2015 dated 31-12-2015 explaining that the pursuant to the judgment of Hon ble Delhi High Court in the case of Nalwa Sons Investment Ltd (supra) and the substitution of Explanation 4 of section 271 of the Act with prospective effect, it is now settled position that prior to 1-4-2016, where the income-tax payable on the total income as computed under the normal provisions of the Act is less than the tax payable on the book profit under MAT provisions of the Act, then penalty u/s. 271(1) ( c) of the Act is not attracted with reference to additions/disallowances made under the normal provisions of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of which inaccurate particulars had been filed. 3. In this context, Hon'ble Delhi High Court in its judgment dated 26.8.2010 in ITA No.1420 of 2009 in the case of Nalwa Sons Investment Ltd. (available in NJRS as 2010-LL-0826-2), held that when the tax payable on income computed under normal procedure is less than the tax payable under the deeming provisions of Section 115JB of the Act, then penalty under section 271(1)(c) of the Act could not be imposed with reference to additions /disallowances made under normal provisions. The judgment has attained finality. 4. Subsequently, the provisions of Explanation 4 to sub-section (1) of section 271 of the Act have been substituted by Finance Act, 2015, which provide for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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