2016 (7) TMI 579

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....s 2003-04 and 2004-05 vide his orders dated 16-02-2006 and 13-12-2006 passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ("Act"). Penalties under dispute were levied by the ACIT, Circle- 9(1) u/s 271(1) (c) of the Act vide his orders, both dated 24-03-2011. At the outset, the learned Counsel for the assessee stated that the facts and circumstances are exactly identical in both the years in regard to levy of penalty by the AO u/s 271 (1) (c) of the Act. Identical grounds are raised by the assessee and identical orders are passed by the CIT (A), hence, we pass this consolidated order for the sake of convenience. 2. The only issue in these appeals of assessee is as regards to the orders of CIT (A) confirming levy ....

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....ing these two provisions:- i) Ad-hoc Miscellaneous exp. Rs. 60,000/- ii) Addition u/s 35D Rs.73,57,252/- iii) Provision for leave encashment Rs. 2,73,003/- iv) Provision for gratuity Rs. 6,53,688/-   4. Learned Counsel for the assessee before us explained that the CIT (A) has deleted the levy of penalty in respect to other additions and only confirmed the penalty in respect to these two items i.e. provision for leave encashment and provisions for gratuity added by the AO while computing book profit u/s 115JB of the Act. The AO levied penalty for the simple reason that the assessee has not added back the provisions to the book profit despite the fact that these liabilities have not accrued or as....

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....aded will mean the tax chargeable not as if it were the total income. Once, we apply this rationale to Explanation 4 given by the Supreme Court, in the present case, it will be difficult to sustain the penalty proceedings. Reason is simple. No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed under Section 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under Section 115JB of the Act. Hence, when the computation was made under Section 115JB of the Act, the aforesaid conce....

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....in additions/disallowances made under normal provisions of the Income Tax Act, 1961 but tax levied under MAT provisions u/s 115JB/115JC, for cases prior to A.Y. 2016-17-reg.- Section 115JB of the Act is a special provision for levy of Minimum Alternate Tax on Companies, inserted by Finance Act 2000 with effect from 1-4-2001. 2. Under clause (iii) of sub-section (1) of section 271 of the Act, penalty for concealment of income or furnishing inaccurate particulars of income is determined based on the "amount of tax sought to be evaded" which has been defined inter-alia, as the difference between the tax due on the income assessed and the tax which would have been chargeable had such total income been reduced by the amount of concealed in....