2018 (11) TMI 1247 - AT - Income Tax

Tribunal Upholds Deletion of Penalty Under Tax Act, Revenue's Appeal Dismissed

The tribunal upheld the deletion of a penalty imposed under section 271(1)(c) of the Act, citing disallowances and losses. The penalty was deleted based ... MAT u/s 115JB - levying penalty on tax sought to be evaded in respect disallowances/ additions made under computation of income under normal provisions as well computation of book profits under section 115JB - Held that:- In considered view ratio laid down in the case of CIT vs. Nalwa Sons Investments Ltd. [2010 (8) TMI 40 - DELHI HIGH COURT] is squarely applicable to the present facts of the case. Admittedly in the present case penalty has been levied on an amount which forms part of computation of book profit under section 115JB of the Act. And therefore concealment of income would have no role to play and would not lead to tax evasion. Respectfully following the decision in the case of CIT vs. Nalwa Sons Investments Ltd., (supra), which has been approved by Hon’ble Supreme Court based upon which a Circular also has been issued by CBDT, we do not find any case to interfere with. - decided against revenue. Issues:1. Penalty imposed under section 271(1)(c) of the Act on disallowance of prior period expenses, loss due to posting error, and expenses claimed for unascertained liabilities.2. Adjudication on penalty levied on tax sought to be evaded under normal provisions and section 115JB of the Act.3. Penalty on disallowance of prior period expenses and assets written off.4. Deletion of penalty by Ld.CIT(A) based on a decision of Hon’ble Delhi High Court.5. Appeal by revenue against the deletion of penalty on an amount in computation of book profit under section 115JB of the Act.Analysis:1. The cross appeals were filed by the revenue and the assessee against an order passed by Ld. CIT (A)-16, Delhi for the assessment year 2006-07. The revenue challenged the deletion of a penalty of Rs. 40,03,864 imposed under section 271(1)(c) of the Act, citing disallowances and losses. The assessee filed cross objections against the penalty order passed by the Ld. AO under section 271(1)(c) of the Act.2. The case involved the revision of the income declaration by the assessee, scrutiny leading to various disallowances/adjustments, and subsequent penalty notices issued by the Ld. AO. The Ld.CIT(A) deleted the penalty based on a decision of the Hon’ble Delhi High Court.3. The revenue appealed against the deletion of the penalty on an amount in the computation of book profit under section 115JB of the Act. The Ld.Counsel cited precedents and a CBDT circular in support of the decision. The tribunal upheld the deletion of the penalty based on the decision of the Hon’ble Delhi High Court.4. The tribunal concluded that the penalty levied on an amount forming part of the computation of book profit under section 115JB of the Act did not involve concealment of income leading to tax evasion. Following the precedent set by the Hon’ble Delhi High Court and the CBDT circular, the tribunal dismissed the appeal filed by the revenue and consequently dismissed the cross objection filed by the assessee.5. The judgment was pronounced on 23/10/2018, upholding the decision to dismiss the appeal by the revenue and the cross objection by the assessee.