2016 (4) TMI 553 - AT - Income Tax

Tribunal dismisses Revenue's appeal on penalty deletion under Income-tax Act

The I.T.O, Ward – 5 (4), New Delhi Versus Multiplex Capital Ltd

The Tribunal dismissed the Revenue's appeal challenging the deletion of a penalty imposed under Section 271(1)(c) of the Income-tax Act. The Tribunal ... Penalty u/s 271(1)(c) - deemed income is assessed u/s 115JB - rebate u/s 88E - whether penalty is time barred? - Held that:- 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. 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 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. Issues Involved:1. Deletion of penalty under Section 271(1)(c) of the Income-tax Act, 1961.2. Allegation of concealment of income and furnishing inaccurate particulars.3. Validity of penalty order under Section 275(1)(a) of the Act.4. Application of Rule 27 of the IT(AT) Rules, 1963.Detailed Analysis:1. Deletion of Penalty under Section 271(1)(c) of the Income-tax Act, 1961:The Revenue challenged the deletion of the penalty of Rs. 27,58,736/- imposed by the AO under Section 271(1)(c) of the Act. The AO had found that the assessee furnished inaccurate particulars of income amounting to Rs. 82,10,528/- and thus imposed the penalty. The CIT(A) deleted the penalty, leading to the Revenue's appeal. The Tribunal upheld the CIT(A)'s decision, relying on the judgment of the Hon'ble High Court of Delhi in the case of Nalwa Sons Investment Ltd., which was confirmed by the Supreme Court. The Tribunal noted that the tax was paid on the deemed income under Section 115JB, making the concealment irrelevant for penalty purposes.2. Allegation of Concealment of Income and Furnishing Inaccurate Particulars:The AO contended that the assessee had concealed income and furnished inaccurate particulars, warranting a penalty under Section 271(1)(c). However, the Tribunal observed that the concealment had repercussions only when assessed under normal provisions, which were not acted upon. Since the income was assessed under Section 115JB (book profits), the concealment did not lead to tax evasion, making the penalty unsustainable.3. Validity of Penalty Order under Section 275(1)(a) of the Act:The assessee argued that the penalty order was time-barred under Section 275(1)(a) of the Act. The Tribunal noted that the ITAT passed the order on 23.12.2011, received by the Commissioner on 23.4.2012, and the penalty order was passed on 30.10.2012, within the prescribed six months. Thus, the Tribunal concluded that the penalty order was not time-barred.4. Application of Rule 27 of the IT(AT) Rules, 1963:The assessee invoked Rule 27 to challenge the penalty order without filing a cross-appeal or cross-objection. The Tribunal referred to various judgments, including ITO Vs. Gurinder Kaur, which allowed the respondent to support the order on any grounds decided against them. The Tribunal held that Rule 27 permits the respondent to challenge the penalty order, and thus, the assessee's objection was valid. However, the Tribunal dismissed the legal objection regarding the penalty order being time-barred.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty. The Tribunal concluded that the concealment had no role in tax evasion since the tax was paid on deemed income under Section 115JB. The penalty order was found to be within the prescribed time limit, and the assessee's invocation of Rule 27 was valid. Consequently, the appeal of the Revenue was dismissed on merits.