IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "E", NEW DELHI
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER
AND
SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
I.T.A.No. 1558/DEL/2013
A.Y. 2005-06
DCIT, Circle 13(1) Nalwa Steel & Power Ltd.
New Delhi 110 002 Vs. 28, Najafgarh Road
New Delhi
PAN: AABCN 3209 L
(APPELLANT) (RESPONDENT)
Assessee by : Sh. VK Tulsian, C.A.
Department by : Sh. B.Dhamkanunjna, Sr.DR
ORDER
PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue against the order of the
Ld.CIT(Appeals) XVI, New Delhi dated 27.12.2012 pertaining to the A.Y.
2005-06.
2. Facts in brief:- The assessee is a Company and it filed its return of
income on 21.10.2005 declaring total income of Rs.4,51,27,183/- under the
normal provisions of the Income Tax Act, 1961 (the Act) and book profit of
Rs.82,97,30,572/- u/s 115 JB of the Act. The Assessing Officer (A.O.)
completed the assessment u/s 143(3) of the Act on 20.12.2007 inter alia
making the following computation under the normal provisions of the Act.
Under Normal Provisions of the Act. Rs.4,51,27,183/-
Total income as declared in the return
Add: (1) Additional depreciation disallowed Rs.5,64,30,426/-
(2) Disallowance u/s 14A of the Act Rs.1,20,540/- Rs. 5,65,50,966/-
Total income under normal provisions of
the Act Rs.10,16,78,149/-
ITA 1558/Del/2013
AY 2005-06
Nalwas Steel & Power Ltd., New Delhi
As far as book profits u/s 115 JB of the Act are concerned, the A.O. has
determined the same as follows.
Book Profit u/s 115 JB of the Act:
Rs.82,97,30,572/-
Book Profit as calculated in the return
Add: (i) Provision for gratuity Rs.8,04,337/-
(ii) Expenditure relatable to income u/s 10 Rs. 1,20,540 Rs. 9,24,877/-
Book Profit u/s 115 JB of the Act Rs.83,06,55,449
Rounded Off Rs.83,06,55,450/-
The tax payable u/s 115 JB of the Act is higher than the tax payable under
normal provisions of the Act, and the assessee was assessed u/s 115 JB of
the Act i.e. on book profits. The A.O. levied penalty u/s 271(1)(c ) of the Act
vide order dt. 30.3.2011. In this order of penalty, the A.O. considered
disallowance made under the normal provisions of the Act where the
depreciation claimed by the assessee u/s 32(1)(iia) of the Act was disallowed
for furnishing of inaccurate particulars of income. This was only item of
disallowance made under the normal provisions of the Act, which was the
subject matter of levy of penalty u/s 271(1)(c ) of the Act. On appeal the
First Appellate Authority deleted the penalty levied applying the decision of
the Jurisdictional High Court in the case of CIT vs. Nalwa Sons Investment
Ltd. Reported in 327 ITR 543. Aggrieved the Revenue is in appeal before us
on the following grounds.
"1. The Ld. CIT (A) has erred in law and on facts in deleting the penalty u/s
27l(l)(c) of the Income Tax Act 1961 amounting to Rs. 2,06,49,304/- imposed
for furnishing inaccurate particulars of its income;
2. The Ld. CIT(A) has erred in law and facts in not appreciating the fact
that provisions of the Income Tax Act 1961 are applicable in the case of the
assessee & not the provisions of the Companies Act 1956 even if the tax paid
by the assessee as per the Book Profit which is calculated as per the
provisions of the Companies Act 1956;
3. The Ld CIT (A) has erred in law and on facts in ignoring the provisions
of section 115JB (5) of the Act, which clearly mentions that "save as otherwise
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ITA 1558/Del/2013
AY 2005-06
Nalwas Steel & Power Ltd., New Delhi
provided in this section, all other provisions of this Act shall apply to every
assessee, being a company, mentioned in this section."
4. The appellant craves to be allowed to add any fresh grounds of appeal
and/or delete or amend any of the grounds of appeal."
3. We have heard Shri P.Dhamkanunja, Ld.Sr.D.R. on behalf of the
Revenue and Shri V.K.Tulsian, C.A. the Ld.Counsel for the assessee.
4 On a careful consideration of the facts and circumstances of the case,
on perusal of material on record, orders of the authorities below, case laws
cited, we hold as follows.
5. The undisputed fact is that the penalty in question related to an item
of disallowance, which the AO sought to make, while computing the total
taxable income under the normal provisions of the Act. Ultimately the AO
did not bring to tax the assessee under normal provisions of the Act. This
is for the reason that the book profits determined u/s 115 JB of the Act
resulted in higher income. The A.O. had assessed the income of the
assessee only u/s 115 JB of the Act. Under these circumstances the First
Appellate Authority was right in applying the binding decision of the
Jurisdictional High Court in the case of CIT vs. Nalwa Sons Investments
P.Ltd. reported in 327 ITR 543. Thus, we uphold the following finding of the
First Appellate Authority.
"5.4. Hon'ble Jurisdictional Delhi High Court in the case of CIT vs. Nalwa
Sons Investments Ltd. Reported in 327 ITR 543 held that:
"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 u/s 115 JB 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 u/s 115 JB of the Act. Hence,
when the computation was made u/s 115 JB of the Act, the aforesaid
concealment had no role to play and was totally irrelevant. Therefore, the
concealment did not lead to tax evasion at all."
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ITA 1558/Del/2013
AY 2005-06
Nalwas Steel & Power Ltd., New Delhi
SLP filed by the Department against the aforesaid decision of the High Court
has also been dismissed by the Supreme Court vide order dt. 4.5.2012 in SLP
no.18564/2011."
6. In the result Revenue's appeal stands dismissed.
Order pronounced in the Open Court on 24th June, 2015.
Sd/- Sd/-
[H.S.SIDHU] [J. SUDHAKAR REDDY]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dt. the 24th June, 2015
· Manga
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar, ITAT, Delhi Benches
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