2013 (9) TMI 751 - HC - Income Tax

Dismissal of income tax appeal for penalty under Section 271-1C aligns with Delhi High Court judgment

The High Court dismissed the income tax appeal, upholding the ITAT's decision to delete the penalty imposed under Section 271-1C. The court aligned with ... Penalty u/s 271(1)(c) of the Income Tax Act – Calculations of income u/ s115JB - Minimum Alternate Tax (MAT) – Held that:- Reliance has been placed upon the judgment of Delhi High Court in CIT v. Nalwa Sons Investment Ltd., [2010 (8) TMI 40 - DELHI HIGH COURT], which has also been affirmed by the Hon’ble Supreme Court of India – Delhi High Court in the above case has held that income of the assessee was assessed under Section 115-JB and not under normal provision - 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 u/s 115JB which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed u/s 115JB. Hence, when the computation was made u/s 115JB, the concealment had no role to play and was totally irrelevant. Therefore, the concealment did not lead to tax evasion at all. In the instant case, in respect of MAT companies, which are assessed under Section 115-JB, where the furnishing of inaccurate particulars does not result into any evasion of tax – Decided against the Revenue. Issues:1. Whether the ITAT erred in deleting the penalty imposed under Section 271-1CRs.2. Whether the ITAT was wrong in concluding that there was no concealment due to assessment not being done under normal procedureRs.3. Whether the ITAT erred in deleting the penalty by ignoring the provisions of Section 271-1CRs.Analysis:1. The case involved an income tax appeal under Section 260-A of the Income Tax Act, 1961 arising from a judgment by the Income Tax Appellate Tribunal for the assessment year 2008-09. The appellant challenged the deletion of penalty under Section 271-1C by the ITAT. The penalty was imposed by the Assessing Officer for furnishing inaccurate particulars of income amounting to Rs. 65,62,375. The CIT (A) upheld the penalty, emphasizing that the penalty provision operates when there is a failure to fully or truly disclose all material particulars of income. The ITAT found the case aligned with the judgment of the Delhi High Court and dismissed the appeal, stating the penalty could not have been imposed. The Supreme Court also upheld the reasoning given by the Delhi High Court, leading to the dismissal of the income tax appeal.2. The ITAT's decision was based on the judgment of the Delhi High Court in a similar case where it was held that concealment did not lead to tax evasion as the assessment was not done under the normal procedure but under Section 115-JB. The High Court emphasized that the concealment had no role to play in the assessment under Section 115-JB, and thus, the penalty could not be imposed. The Supreme Court approved the reasoning on merits, concluding that in cases of MAT companies assessed under Section 115-JB, furnishing inaccurate particulars does not result in tax evasion.3. The ITAT's deletion of the penalty was based on the interpretation of provisions and language of Section 271-1C, emphasizing that inaccurate particulars should lead to tax evasion for penalty imposition. The Delhi High Court's judgment, upheld by the Supreme Court, supported this view by stating that in cases where the assessment is not done under normal procedure but under Section 115-JB, concealment does not lead to tax evasion. Therefore, the penalty was rightly deleted by the ITAT based on this interpretation.In conclusion, the judgment by the High Court dismissed the income tax appeal, affirming the decisions of the ITAT and the Delhi High Court, supported by the Supreme Court's approval. The case highlights the significance of accurate disclosure of particulars of income and the interpretation of penalty provisions in cases of MAT companies assessed under Section 115-JB.