2016 (7) TMI 1623 - AT - Income Tax

Tribunal Rules No Penalty for Tax Paid under Section 115JB

The Tribunal upheld the deletion of penalty under section 271(1)(c) by the Ld. Commissioner of Income Tax, Mumbai, amounting to Rs. 1,63,71,320, based on ... Penalty u/s 271(1)(c) - tax was calculated on the deemed income under section 115JB - As the assessee has tax liability under section 115JB, however, it has offered tax under normal provisions of the Act and, therefore, had furnished inaccurate particulars to evade tax - CIT- A deleted the penalty levy - HELD THAT:- As considering the decision in CIT vs. Nalwa Sons Investments Ltd. at the SLP against the decision was rejected by Hon'ble Apex Court [2012 (5) TMI 150 - SC ORDER] and the facts available on record there is no dispute to the fact that the assessment as per normal procedure was not acted upon and only the deemed income assessed under section 115JB became the basis of assessment as it was higher of the two. In the case of Nalwa Sons Investment Ltd. it was held that when the tax was calculated on the deemed income under section 115JB. the Revenue is not to impose penalty. Since the tax has been paid by the assessee under section 115JB, therefore, not penalty could be levied in respect of additions/disallowances made by the Assessing Officer. Respectfully following the decision M/S. NALWA SONS INVESTMENTS LTD. [2010 (8) TMI 40 - DELHI HIGH COURT] we find no infirmity in the conclusion of the learned CIT(A). Resultantly the appeal filed by the Revenue is dismissed. Issues:1. Penalty under section 271(1)(c) for inaccurate particulars of income under section 115JB.2. Consideration of CIT vs. Nalwa Sons Investment Ltd. 327 ITR 543 (Del) in penalty imposition.3. Revisional jurisdiction under section 263 of the Act.4. Deletion of penalty by the learned CIT(A) based on Nalwa Sons Investment Ltd. case.5. Applicability of penalty under section 271(1)(c) when tax is paid under section 115JB.Issue 1: Penalty under section 271(1)(c) for inaccurate particulars of income under section 115JBThe Revenue challenged the deletion of penalty under section 271(1)(c) by the Ld. Commissioner of Income Tax, Mumbai, amounting to Rs. 1,63,71,320, arguing that the assessee had a tax liability under section 115JB but paid tax under normal provisions, leading to inaccurate particulars to evade tax. The Tribunal analyzed the relevant portion of the impugned order and concluded that penalty cannot be levied under section 271(1)(c) if income is computed under section 115JB, citing the decision in CIT vs. Nalwa Sons Investment Ltd. The Tribunal upheld the deletion of the penalty based on this reasoning.Issue 2: Consideration of CIT vs. Nalwa Sons Investment Ltd. 327 ITR 543 (Del) in penalty impositionThe Tribunal extensively considered the decision in CIT vs. Nalwa Sons Investment Ltd., where it was held that penalty under section 271(1)(c) cannot be imposed if income is calculated under section 115JB. The Tribunal emphasized that when tax is paid on deemed income under section 115JB, the concealment of income does not lead to tax evasion. The Tribunal relied on the rejection of the Special Leave Petition (SLP) against this decision by the Hon'ble Supreme Court, reinforcing that penalty cannot be levied in such cases.Issue 3: Revisional jurisdiction under section 263 of the ActThe revisional jurisdiction under section 263 was invoked by the CIT to tax the assessee under section 115JB, leading to the assessment of income under this section. The Tribunal noted that the assessee paid tax accordingly, and the subsequent penalty under section 271(1)(c) was based on alleged inaccurate particulars of income. However, following the decision in Nalwa Sons Investment Ltd., the Tribunal found no grounds for penalty imposition in this scenario.Issue 4: Deletion of penalty by the learned CIT(A) based on Nalwa Sons Investment Ltd. caseThe learned CIT(A) considered the written submissions of the assessee, particularly referencing the decision in Nalwa Sons Investment Ltd., which resulted in the deletion of the penalty. The Tribunal acknowledged the relevance of this case law in determining the inapplicability of penalty under section 271(1)(c) when tax is paid under section 115JB, leading to the dismissal of the Revenue's appeal.Issue 5: Applicability of penalty under section 271(1)(c) when tax is paid under section 115JBThe Tribunal emphasized that since the tax was paid by the assessee under section 115JB, no penalty could be levied for additions/disallowances made by the Assessing Officer. By following the decision in Nalwa Sons Investment Ltd. and the subsequent rejection of the SLP by the Supreme Court, the Tribunal upheld the deletion of the penalty, concluding that the assessment based on deemed income under section 115JB precluded penalty imposition under section 271(1)(c).This detailed analysis of the judgment highlights the key issues surrounding the penalty imposition under section 271(1)(c) in cases involving computation of income under section 115JB, as interpreted through the lens of relevant case law and legal provisions.