2019 (7) TMI 297 - AT - Income Tax

Tribunal overturns penalty under Income-tax Act for A.Y. 2008-09

The Tribunal overturned the penalty of Rs. 1,39,15,733 imposed under section 271(1)(c) of the Income-tax Act, 1961 for A.Y 2008-09. The Tribunal held that ... Penalty u/s 271(1)(c) - tax payable as per book profit u/s 115JB - penalty levied in respect of addition under normal provision of Act - HELD THAT:- No penalty is leviable when income is assessed under the provisions of section 115JB of the Act and penalty is levied on the additions made under normal provisions of the Act. AO has made certain additions while computing the book profit u/s 115JB of the Act. Thus, it can be seen that the assessment is ultimately framed u/s 115JB of the Act whereas the penalty has been levied on the additions made for computing the income u/s 143(3) of the Act. This issue is now well settled in favour of the assessee and against the revenue by the decision of the Hon'ble High Court of Delhi in the case of Nalwa Sons Investment Ltd [2010 (8) TMI 40 - DELHI HIGH COURT] - appeal of the assessee is allowed Issues involved:1. Sustaining penalty under section 271(1)(c) of the Income-tax Act, 1961.Detailed analysis:The appeal was filed against the order of the ld. CIT(A) pertaining to A.Y 2008-09, challenging the penalty of Rs. 1,39,15,733 levied under section 271(1)(c) of the Act. The first appellate authority dismissed the appeal in limine, indicating a lack of proper appreciation of facts. The assessment was done under section 143(3) of the Act, with the income computed under different heads, including Business & Profession. The tax liability was calculated under section 115JB of the Act, leading to penalty proceedings under section 271(1)(c) based on additions made in the normal provisions of the Act.The Tribunal observed that no penalty should be levied when income is assessed under section 115JB of the Act, and penalty is imposed on additions made under normal provisions. Citing the decision of the Hon'ble High Court of Delhi in a specific case, it was concluded that the penalty should not be imposed in such scenarios. Additionally, a Circular issued by the CBDT further supported this position, emphasizing that penalties should not be attracted for cases where tax payable on total income computed under normal provisions is less than the tax on book profits under section 115JB of the Act.Based on the settled legal position and the Circular provided, the Tribunal directed the Assessing Officer to delete the penalty amount of Rs. 1,39,15,733. Consequently, the appeal of the assessee was allowed, and the penalty was revoked. The decision was pronounced in the open court on 04.07.2019.