TaxTMI 
TaxTMI 
2025 (7) TMI 1108
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....ls, the same are disposed of by this common order. 2. Brief facts of the case are that the assessee is a company filed its original return of income on 29/09/2009 declaring total income under the normal provision at a loss of Rs. (-) 30,60,24,048/- and book profit u/s. 115JB of the Act of Rs. 2,01,98,19,080/-. Regular assessment was completed u/s. 143(3) of the Act on 25/03/2013 determining the total income under normal provision at Rs. 2,08,77,75,356/- and book profit u/s. 115JB of the Act at Rs. 2,66,69,14,229/-. The AO initiated penalty proceedings u/s. 271(1)(c) of the Act by issuing notice dated 25/03/2013 u/s. 274 of the Act. Penalty proceedings were kept in abeyance as the assessee had preferred appeal against the quantum assessment order before the CIT(A)-2, Vadodara and further appeal before ITAT. After disposal of the appeals by the Tribunal in ITA Nos.1666 & 1663/Ahd/2014 vide order dated 08/09/2017, certain additions were confirmed in favour of the Revenue. Therefore, a fresh opportunity of hearing was offered to the assessee by issuing the show-cause notice dated 13-07-2018 and assessee filed its detailed reply on 19-07-2018. On considering the same, the Assessing O....
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.... passed by the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as 'the Id. CIT-(A)'] is bad in law and on facts. 2. Re: Levy of Penalty u/s 271(1)(c) of Rs. 6,52,00,000/-: 2.1 On the facts and in circumstances of the Act, the Id. CIT(A) grossly erred in confirming the action of the Assessing Officer in levying the penalty. 2.2 On the facts and in the circumstances of the case and in law, the Id. CIT (A) has erred in upholding the validity of the penalty order without appreciating that the Assessing Officer had not recorded proper satisfaction. The Id. CIT(A) failed to appreciate that the Assessing Officer had initiated penalty proceedings under both the limbs of section 271(1)(c) of the Act i.e. 'for concealment of particulars of income' and 'furnishing inaccurate particulars of income whereas levied penalty by holding that the Assessee has 'furnished inaccurate particulars of income. 2.3 Without prejudice to above, the Id. CIT(A) failed to appreciate that the issuance of show cause notice under section 274 of the Act by the Assessing Officer in standard printed form without striking out irrelevant cl....
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....y on the issue of addition of Rs. 94,71,966/- in total income as per provisions of Section 115JB on account of provision of doubtful debts & advances. 4. The appellant craves leave to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal. Relief claimed in appeal It is prayed that the order of the CIT (Appeals) be set aside on the above issues and that of the Assessing Officer be restored." 5. First, we shall take up the appeal filed by the Revenue in ITA No.1785/Ahd/2019. 5.1. Ground No.1 is pertaining to deletion of Rs. 4,22,27,759/- on selling and distributing expenses wherein penalty u/s. 271[1][c] was levied for furnishing inaccurate particulars of income. The findings of Ld.CIT(A) are as follows: "7. Ground No. 3.1 pertains to imposition of penalty on disallowance of Selling and Distribution expenses incurred on behalf of M/s. Sun Pharmaceutical Industries (SPI) and M/s. Sun Pharma Sikkim (SPS) u/s. 14A and (b). The Assessing Officer has made disallowance of Rs. 4,22,77,759/- u/s. 14A read with Rule 8D of the income -tax Rule, 1962 and penalty proceedings u/s. 271(1)(c) had also been initiated in....
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....in respect of disallowance made u/s. 14A of the Act, because there was no evidence in respect of furnishing inaccurate particulars of income and dismissed the Revenue's appeal which was confirmed by the Hon'ble Supreme Court by dismissing the SLP filed by the Revenue, which is reported in (2018) 100 Taxmann.com 104(SC). The Hon'ble Supreme Court has held as under: "Section 14A, read with section 271(1)(c) of the Income-tax Act, 1961 - Expenditure incurred in relation to income not includible in total income (Penalty) - Tribunal deleted penalty under section 271(1)(c) in respect of disallowance made under section 14A because there was no evidence in respect of furnishing inaccurate particulars of income - High Court upheld order passed by Tribunal - Whether, on facts SLP filed against decision of High Court was to be dismissed". 6.1. Ld Senior Counsel further relied upon the judgement of the Jurisdictional High Court in the case of PCIT vs. Gujarat State Electricity Corporation Ltd. reported at (2022) 144 Taxmann.com 165 (Guj.), wherein it was held as follows: "INCOME TAX: Where assessee, a public sector undertaking, had made a bona fide mistake of accounting in....
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.... items purchased resulted enduring benefits to the appellant. Undisputedly, genuineness of the expenses has not been doubted and merely because certain expenses have been considered as capital in nature, penalty u/s. 271(1)(c) cannot be imposed. This view gets support from the ratio laid down in the case of Reliance Petroproducts Pvt. Ltd. (supra). Hence the penalty imposed by the Assessing Officer on this account is directed to be deleted and appellant succeeds in respect of Ground No. 10." 8.1. In view of above facts, the penalty levied by the Assessing Officer is not sustainable. Hence it stands cancelled." 8.1. Ld. Sr. Counsel submitted that the Co-ordinate Bench of this Tribunal in assessee's own case relating to the Asst Year 2008-09 in ITA No. 921/Ahd/2017 deleted the levy of penalty by observing as follows: "28. The learned DR before us contended that the assessee has furnished inaccurate particulars of income by treating the capital expenditure under the head repair and maintenance as revenue in nature. Thus the assessee to this extent has furnished the inaccurate particulars of income. 29. On the other hand, the learned AR before us submitted....
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.... assessee fails to substantiate the explanation offered by him and fails to prove that such explanation is bona fides with respect to material facts relating to the computation of total income. 30.2 Going further, we also note the Hon'ble Supreme Court in case of Reliance Petroproducts Pvt Ltd. reported in 322 ITR 158 where the Hon'ble court observed that mere claim of the assessee which is not sustainable does not tantamount to concealment of income or filing inaccurate particulars of income. The relevant observation of Hon'ble Supreme Court reads as under: The revenue contended that since the assessee had claimed excessive deductions knowing that they were incorrect, it amounted to concealment of income. It was argued that the falsehood in accounts can take either of the two forms: (1) an item of receipt may be suppressed fraudulently; (11) an item of expenditure may be falsely (or in an exaggerated amount) claimed, and both types attempt to reduce the taxable income and, therefore, both types amount to concealment of particulars of one's income as well as furnishing of inaccurate particulars of income. Such contention could not be accepted as th....
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....see as well as on SPI on 14.07.2006, the appellant had made disclosure with respect to addition of provision of doubtful debts and advance of Rs. 94,71,966/- in working of book profit u/s. 115JB of the Act and appellant has also accepted that the claim was not as per the provision of the Act. The appellant did not offer the same for taxation under the provision of section 115JB at the time of filing the return of income. In view of these facts, the assessee company has intentionally furnished inaccurate particulars of income by not offering claim of provision for doubtful debts and advance under the provisions of section 115JB. During the appellate proceedings the AR of the appellant has stated that the appellant has claimed deduction of provision for doubtful debt for computing book profit under section 115JB based on the decision of Supreme Court and hence, the appellant was under bona fide view that the deduction is allowable and also stated that the Finance (No.2) Act, 2009 has inserted clause (i) to explanation 1 to section 115JB with retrospective effect which states that the amount set aside as provision for diminution in the value of any asset is not allowable as deduction.....
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....) 46 Taxmann.com 344 (Guj.), wherein the Hon'ble High Court has deleted the penalty levied u/s. 271(1)(c) of the Act, by observing as under: "Section 271(1)(c), read with section 115JB. of the Income-tax Act. 1961 Penalty - For concealment of income (Income of MAT companies) - Whether where after concealment in unearthed or assessee's act of supplying inaccurate particulars comes to light, tax liability before or after concealment remains same, by virtue of clause (c) of Explanation 4 to section 271(1), no penalty would be imposed - Held, yes - Whether simply because before and after additions, assessee remained a MAT company and paid tax under section 115JB or such similar provision, that by itself does not mean that no penalty could be imposed Held, yes -Whether if effect of addition of concealed income results in higher minimum alternate tax by increasing book profit also, penalty could as well be imposed Held, yes [Paras 10 & 12] [In favour of assessee]." 11.1. Thus, we do not find any infirmity in the order passed by the Ld. CIT(A) cancelling the penalty of Rs. 94,71,966/- levied on the provisions for doubtful debts & advances u/s. 115JB of the Act. Thus, Groun....
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.... the Act. 6.1. The Ld. Authorized Representative has relied upon the decision of Hon'ble Delhi High Court in the case of Ms. Madhushree Gupta Vs. Union of India & Anr [WP(C) No. 5059 of 2008] wherein Hon'ble High Court held that position regarding the recording of satisfaction is no different post- amendment. I have gone through this decision also and I find that Hon'ble Karnataka High Court in the case of B. Damodar Vaman Baliga Jewellers Vs. JCIT (2013) 353 ITR 206 (Kar.), after considering the decision of Hon'ble Delhi High Court in the case of Ms. Madhushree Gupta Vs. Union of India (2009) reported in 317 ITR 107, held that where assessment order contains a direction for initiation of penalty proceedings u/s. 271(1)(c), such an order of assessment or reassessment shall be deemed to constitute satisfaction of Assessing Officer for initiation of penalty proceedings in term of section 271(1B). Therefore, in view of the above factual and legal position, I hold that Assessing Officer had recorded his satisfaction as mandated by the law and hence arguments of Ld. Authorized Representative on this account are rejected. 6.2. The appellant has also subm....
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.... or "furnishing inaccurate particulars of income" does not arise. Thus, the case laws relied by the assessee on this issue are clearly distinguishable and there is no merit in the Ground No.2 raised by the assessee and the same is dismissed. 14. Ground No.3 pertains to levy of penalty on the addition of Rs. 57.49 crs in the book profit u/s. 115JB being the remuneration received from Partnership firms M/s. Sun Pharmaceutical Industries ('SPI') and Sun Pharma Sikkim ('SPS'). The Ld. CIT(A) discussed the issue as follows: "...9.1. Ground No. 4.1 pertains to imposition of penalty u/s. 271(1)(c) on addition of Rs. 57,49,50,297/- in the book profit u/s. 115JB being the remuneration received from partnership firm. The Assessing Officer was added back to book profit w/s. 115JB of the Income-tax Act, 1961 of Rs. 57,49,50,297/- and penalty proceedings u/s. 271(1)(c) had also been initiated in the assessment order. The appellant had preferred appeal against the assessment order before the CIT(A)-II, Vadodara and further the appellant and revenue preferred appeal against the order of the CIT(A) before the Hon'ble ITAT. The Hon'ble Tribunal and CIT(A) have co....
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....ook profit w/s. 115JB, the additions/disallowances made to book profit are liable for imposition of penalty u/s. 271(1)(c). In this regard, reliance is placed on the decision in the cases of SBI DFHI Ltd. Vs. ACIT (2016) 71 taxmann.com 178 (Mum-ITAT), Shri Gokulam Hotels India Pvt. Ltd. Vs. ACIT (2014) 49 taxmann.com 543 (Mad-HC) and CIT Vs. Citi Tiles Ltd. (2014) 46 taxmann.com 344 (Guj-HC). Accordingly penalty imposed by the Assessing Officer on this account is confirmed. However, it is clarified that the penalty on this account will be imposed only if income is finally assessed u/s. 115JB instead of under normal provisions. Thus, Ground No. 14 is dismissed." 9.2. In view of above facts, the penalty levied by the Assessing Officer on this account is confirmed with the same rider as underlined above. Thus, Ground No. 4.1 is dismissed" 15. Ld. Sr. Counsel submitted that the Co-ordinate Bench of this Tribunal deleted the penalty levied on similar addition in the order dated 24-08-2022 passed in ITA No.928/Ahd/2017 relating to the Asst Year 2008-09 by observing as follows: "....19. We have heard the rival contentions of both the parties and perused the materials ....
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.... explanation is bona fides with respect to material facts relating to the computation of total income. 19.2 Going further, we find that the claim of the assessee was not allowed by the ITAT in the own case of the assessee with respect to the deduction claimed by it for the remuneration received from the partnership firm while calculating the profit under the provisions of section 115JB of the Act in the earlier years including in the year under consideration and in subsequent year. However, we note that recently, Hon'ble Calcutta High Court in the case of PCIT vs. M/s Ankit Metal & Power Ltd. reported in 416 ITR 591, held that items of receipt which are not income under the provision of section 2(24) of the Act cannot be made subject to tax under the provisions of MAT while calculating the profit under section 115 JB of the Act. The relevant extract of the judgment is reproduced as under: "27. In this case since we have already held that in relevant assessment year 2010-11 the incentives 'Interest subsidy' and 'Power subsidy' is a 'capital receipt' and does not fall within the definition of 'Income' under Section 2(24) of Income....
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....u/s. 154 is bad in law: 2.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in initiating the rectification proceedings and passing the order u/s. 154 of the Act as: 2.1.1 There was no mistake apparent on record; 2.1.2 The issue involved was highly legal and debatable in nature; 2.1.3 It was merely based on change of opinion. 2.2 The Ld. CIT(A) erred in initiating rectification proceedings without considering that the penalty in the original order passed under section 250 was deleted after considering the decision of Hon'ble Gujarat High Court in the case of Vodafone Essar Gujarat Ltd [2017] 397 ITR 55. 3. Re: Levy of Penalty u/s 271(1)(c) of Rs. 11,00,000/-: 3.1 On the facts and in circumstances of the Act, the Ld. CIT(A) grossly erred in confirming the action of the Assessing Officer in levying the penalty. 3.2 On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in upholding the validity of the penalty order without appreciating that the Assessing Officer had not recorded proper satisfaction. The Ld. CIT(A) failed to appreciate that th....