TaxTMI 
TaxTMI 
2016 (4) TMI 553
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....rred in deleting the penalty by holding that the appellant had paid the taxes under deemed income whereas tax has been paid by the appellant under normal provisions. 3. That the order of the ld. CIT(A) is erroneous and is not tenable on facts and in law. 4. That the grounds of appeal are without prejudice to each other." 3. Briefly stated, the facts giving rise to this appeal are that the assessee company filed its return of income for A.Y 2007-08 declaring total income of Rs. 3,66,77,400/- and tax payable at Rs. 3,17,981/- after claiming rebate u/s 88E of the Income-tax Act, 1961 ['the Act' for short] of Rs. 1,07,19,814/-. The deemed total income u/s 115JB of the Act and tax payable as per return were Rs. 3,55,71,182/- and Rs. 35,57,118/- respectively and it was held that the assessee did not pay tax of Rs. 33,57,118/- as per section 115JB of the Act. In the assessment order, the AO had made additions/disallowances on certain issues and the AO had recorded the finding that he was satisfied that the assessee company had filed incorrect particulars of its income and had concealed the income and tax payable therein with respect to the additions made on al....
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....Act. 8. Replying to the above, the ld. CIT(DR) pointed out that without filing any cross appeal or cross objection, the assessee cannot raise any legal objection at second appellate stage before the Tribunal. The ld. DR also pointed out that even if the assessee is allowed to raise legal objection by way of invoking Rule 27 of Rules, then also it may observed that as per order of the Tribunal dated 23.12.2011 [as per copy of order of Tribunal] it is apparent that the Commissioner received copy of the Tribunal order dated 23.4.2012 and the impugned penalty order has been made on 30.10.2012. In the light of the above facts, when we test the validity of order at the angle of limitation prescribed u/s 275(1)(a) of the Act, then it is apparent that under this provision, the penalty order should be passed within six months from the end of the month in which the order of the Tribunal has been received by the Commissioner or other competent authority. 9. Per contra, the ld. AR submitted that as per the proposition laid down by the Tribunal in the case of ITO Vs. Gurinder Kaur reported as 102 ITD 189 [Delhi-Tri], the assessee can raise legal objections which can be decided on the evid....
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....ohtak and Hissar Districts Electric Supply Co. (P.) Ltd, v. CIT , it is possible to hold that he found against the assessee on this point. On this reasoning, it is open to the assessee to raise the question of non-recording of reasons for reopening the assessment before the Tribunal for the first time and seek to support the ultimate decision of the CIT(A). Even the non-disclosure of the reasons can be said to be covered by ground No. 2 taken before the CIT(A) and in the absence of any definite decision by the CIT(A), the same conclusion would follow namely, that it is open to the assessee to invoke Rule 27 even in respect of this point. As regards the approval of the JCIT under Section 151(1), it is fairly admitted on behalf of the assessee that this was not specifically taken either before the Assessing Officer or before the CIT(A) and, therefore, we hold that Rule 27 may not be strictly speaking available to the assessee. 11. Even de hors Rule 27 of the Appellate Tribunal Rules, it is open to the respondent in an appeal before the Tribunal to raise a new ground in defence of the order appealed against. It has been so held by the Supreme Court in Hukam Chand Mills Ltd. v....
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.... Gujarat High Courts cited on behalf of the assessee. Therefore, whether it is the appellant or the respondent before the Tribunal, new points or contentions can be raised provided they did not involve investigation into facts (as contrasted with the record) and that an opportunity is given to the other side to meet the contentions. Applying these principles to the present case, we overrule the preliminary objection of the Ld. Sr. DR and permit the assessee to raise the new points before us as a respondent." 11. In the light of the above noted propositions, when we proceed to decide the controversy as to whether the assessee can validly challenge the validity of impugned penalty order notwithstanding the respondent assessee has neither filed cross appeal nor cross objection. For proper adjudication of above legal controversy, we find it appropriate to take note of Rule 27 of the Rules which reads as under: "The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him" A vigilant reading of the said Rule manifests that the respondent, whether the assessee or revenue without having filed any cross app....
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....dragged respondent accepted the same by consoling himself with the ultimate favourable conclusion recorded by the lower forum. Furthermore, when the said winner is dragged before the Tribunal challenging the order passed in his favour by the loser party then this Rule 27 of the Rules comes into play to rescue the winner-respondent. 13. On the basis of threadbare analysis of Rule 27 in the light of propositions/dicta laid down by the Hon'ble High Court of Bombay in various decision including the order in the case of B.L. Bamasi [supra] and order of the co-ordinate Bench of ht Tribunal in the case of ITO Vs. Smt. Gurinder Kaur [supra] we reach to a fortified conclusion that in the present case the assessee-respondent can very well challenge the impugned penalty order without filing any cross appeal or cross objection by invoking legally available right as mandated by Rule 27 of the Rules. 14. At the very outset, we are not in agreement with the objection of the ld. CIT-DR that the assessee cannot raise legal objection without filing any cross appeal or cross objection because Rule 27 of the Rules provides that the respondent of an appeal may support the order appealed again....
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....ed on record before us. The ld. CIT DR supporting the penalty order submitted that the ld. CIT(A) in the first appellate order dated 25.06.2010 passed in quantum first appeal No. 86/09- 10 recorded clear finding while confirming the additions which lead to conclude that the assessee company had concealed the income and had furnished inaccurate particulars of its income. The ld. CIT-DR further pointed out that after considering the entire facts and circumstances of the case and observations made by the ld. CIT(A) in the quantum appeal it was apparent that the assessee had furnished inaccurate particulars of its income in respect of Rs. 82,10,528/-. Therefore, the AO was quite correct in concluding that the assessee had deliberately concealed income and has furnished inaccurate particulars of its income which attracts penalty u/s 271(1)(c) of the Act. The ld. CITDR vehemently contended that the ld. CIT(A) granted relief to the assessee without any basis and justified reasoning. Therefore, the impugned first appellate order may be set aside by restoring that of the AO. 18. Replying the above, the ld. AR placed his reliance on the decision of the Hon'ble High Court of Delhi in t....
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....nce this condition is satisfied, quantum of penalty is to be levied as per clause (3) of Section 271 (1) ( c) which stipulates that the penalty shall not exceed three times " the amount of tax sought to be evaded". The expression "the amount of tax sought to be evaded" is clarified and explained in Explanation 4 thereto, as per which it has to have the effect of reducing the loss declared in the return or converting that loss into income. It is in this context that in Gold Coins (supra) the Supreme Court explained the legal position as under:- dated 24.7.1976 reported in 1977 (110) ITR 21 (St.) has also substantial relevance. Same reads as follows:- New Explanation 4 defined "the amount of tax sought to be evaded". According to the definition, this expression will ordinarily mean the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed. In a case, however, where on setting off the concealed income, against any loss incurred by the assessee under other head of income or brought forward from earlier years, the&....
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....bed percentage of the „book profits‟ computed under section 115JB of the Act. The higher of the two amounts is regarded as total income and tax is payable with reference to such total income. If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, "book profits‟ are deemed as the total income of the appellant in terms of Section 115JB of the Act. 22. In the present case, the income computed as per the normal procedure was less than the income determined by legal fiction namely "book profits‟ under Section 115 JB of the Act. On the basis of normal provision, the income was assessed in the negative i.e. at a loss of Rs. 369521018. On the other hand, assessment under Section 115 JB of the Act resulted in calculation of profits at Rs. 40163180. 23. In view thereof, in conclusion, the assessment order records as follows:- "Assessed at Rs. 40163180 u/s 115 JB, being higher of two. Interest u/s 234B and 234C has been charged as per the provisions of Income Tax Act, 1961. Penalty proceedings u/s 271 (1) (c) of the Income Tax Act, 1961 have been initiated. Issue necessary forms."....
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.... of the Act was available to the assessee. In this situation, the ACIT/AO had calculated tax payable by the assessee at Rs. 1,76,040/- under normal provisions of the Act and also calculated tax payable by the assessee u/s 115JB of the Act at Rs. 47,28,060/-and undisputedly and admittedly the assessee had paid tax thereon. From the operative part of the first appellate order, we note that the ld. CIT(A) granted relief to the assessee with the following conclusion and observation: "I have perused the penalty order u/s 271(1)(c), assessment order, grounds of appeal and written submission filed by the appellant. I discussed the matter with the ld. AR very carefully. The AO has assessed the income under normal provisions of the Income tax at Rs. 13,69,104/- on which No. 88E is available. The AO i.e. Additional CIT, Range 5 had calculated tax payable by the appellant at Rs. 1,76,040/- under normal provisions of Income tax Act and tax payable of Rs. 47,28,060/- u/s 115JB of the Act. Thus, the appellant had paid tax on 115JB of the Act. Hence there is no question of concealment u/s 271(1)(c) of the Act if computation is made u/s 115JB of the Act. This is supported by the Hon'b....