IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "H" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, AM
AND SHRI GEORGE GEORGE K, JM
ITA No: 3069/Del/2013
AY : 2003-04
T.C.N.S. Ltd. vs. ACIT, Circle 16(1)
3, Community Centre New Delhi
Saket
New Delhi 110 017
PAN: AAACT 5915 C
(Appellant) (Respondent)
Assessee by : Shri M.S.Sahni, Adv.
Department by: Sh. Rakesh Kumar, Sr.D.R.
ORDER
PER GEORGE GEORGE K, JUDICIAL MEMBER
This is an appeal at the instance of the assessee and is directed
against the order of the Ld.CIT(Appeals) dt. 28.2.2013. The order of the
Ld.CIT(Appeals) arises out of the order of the AICT passed u/s 271(1)(c ) of
the Act imposing a penalty of Rs.2,48,600/-. The relevant Assessment Year
is 2004-05.
2. The assessee has raised several grounds in its Memorandum of Appeal.
However the crux of the issue relate to whether the CIT(Appeals) is justified
in confirming the imposition of penalty u/s 271(1)(c ) of the Act.
3. The facts of the case are as follows. The assessee is a company. For
the relevant Assessment Year return of income was filed declaring `nil' income
as per the normal computation of income. However under the provisions of
S.115 JB of the Act, the assessee disclosed book profit of Rs.1,40,83,499/-.
While calculating the book profits of the assessee it had claimed deduction of
ITA No. 3069/Del/2013
Assessment Year 2003-04
T.C.N.S. Ltd., New Delhi
Rs.31,56,838/- u/s 80 HHE of the Act. Assessment was completed u/s 143(3)
of the Act on 20.3.2006 assessing the book profits at Rs.1,40,83,499/-.
Thereafter a notice u/s 148 of the Act was issued since the assessee had
claimed deduction u/s 80HHE of the Act, while computing book profits u/s
115 JB of the Act. In response to the notice u/s 148 of the Act, the
assessee filed income tax return, wherein, he had declared an income of
Rs.1,72,40,338/- and deduction u/s 80 HHE was not claimed while working
out the book profits u/s 115 JB of the Act. Assessment was completed u/s
143(3) r.w.s. 148 of the Act accepting the return filed.
4. The Assessing Officer initiated penalty proceedings u/s 271(1)(c ) of
the Act and imposed a penalty of Rs.2,48,600/- for making a claim of
deduction u/s 80 HHE of the Act while computing book profits u/s 115 JB of
the Act.
5. As against the imposition of penalty, the assessee filed an appeal
before the First Appellate Authority. The Ld.CIT(Appeals) confirmed the
penalty imposed u/s 271(1)(c ) of the Act. The relevant finding of the
CIT(Appeals) read as follows.
"8. The appellant has failed to prove that the explanation given was
bonafide and there was full disclosure of facts. The provisions of
Explanation 1(b) to section 271(1)(c ) are applicable because the
assessee has offered an explanation before the Assessing Officer
which he is not able to substantiate and has also failed to prove that
such explanation is bona fide and that all the facts relating to the
same and material to the computation of his total income have been
disclosed by him. The additions made have been accepted by the
appellant. Under the present system, only a very small percentage of
returns is picked up for scrutiny. Had this case not been reopened u/s
147, the necessary additions would not have been made and the
appellant's suppressed income would not have come to light. The
penalty u/s 271(1)(c ) imposed is the minimum imposable in this case.
Considering the facts, the penalty u/s 271(1)(c ) is justified and is
upheld. The grounds are dismissed."
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ITA No. 3069/Del/2013
Assessment Year 2003-04
T.C.N.S. Ltd., New Delhi
6. The assessee company being aggrieved is in appeal before us. The
Ld.A.R. for the assessee reiterated the submissions made before the Income
tax authorities. The Ld.D.R. present was duly heard on the matter.
7. We have heard rival submissions and perused the material on record.
In the original assessment proceedings the assessee had furnished to the
Assessing Officer the complete calculation of deduction claimed u/s 80HHE of
the Act while working out the book profits u/s 115 JB of the Act. The
contention of the assessee against the imposition of penalty u/s 271(1)(c ) of
the Act was that deduction u/s 80 HHE was claimed due to misconception
and inadvertence and there was no willful intent to conceal any income or
furnishing any inaccurate particulars of such income. It was the submission
of the assessee that it was a bonafide mistake on the part of the Chartered
Accountant and the same is evident from the audit report and Form No.10
CCAF accompanied with the audit report.
7.1. In the instant case, the CIT(Appeals) in the impugned order has held
that provisions of Explanation 1B to S.271(1)(c ) of the Act are applicable
because the assessee has offered an explanation before the Assessing Officer
which he is not able to substantiate. In this background we have to examine
whether the claim made by the assessee of deduction u/s 80 HHE of the Act
while calculating book profits is a bonafide claim or not. The assessee while
filing the income tax return in the original assessment proceedings had lost
sight of provisions of Sec.80A(2) of the Act according to which no deduction
u/s 80HHE of the Act was allowable if it exceeds the gross total income of the
assessee. On facts on record and on perusal of the audit report, the
Chartered Accountant concerned has also made a mistake in making a claim
of deduction u/s 80 HHE of the Act. In the original assessment proceedings
book profit was calculated at Rs.1,40,83,499/- and tax has been paid for
Rs.11,09,576/-. In the return pursuant to s.148 notice the total income
declared u/s 115JB was Rs.1,72,40,338/- and tax payable was
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ITA No. 3069/Del/2013
Assessment Year 2003-04
T.C.N.S. Ltd., New Delhi
Rs.13,57,677/-. On making the claim of deduction u/s 80HHE of the Act
there is a short deduction of tax amounting to Rs.2,78,432/- which includes
also the interest. The calculation of deduction u/s 80HHE while computing the
book profit u/s 115JB was also filed in the computation statement. As
mentioned earlier, assessee has declared substantial income and tax sought
to be evaded is only Rs.2,78,432/- (which also includes interest). Therefore
the contention of assessee that 80 HHE deduction was made by inadvertence
is only reasonable and the same cannot be brushed aside as not bonafide.
This is also evident from the fact that the Chartered Accountant of the
assessee has also committed an error in claiming deduction u/s 80HHE of the
Act in the audit report accompanying the return of income. Therefore, under
the facts and circumstances of the case we are of the opinion that there is
no willful default on the part of the assesse in furnishing inaccurate
particulars of income warranting imposition of penalty u/s 271(1)(c ) of the
Act. Therefore the order of CIT(Appeals) confirming the imposition of penalty
is set aside.
8. In the result the appeal of the assessee is allowed.
Order pronounced in the Open Court on 24th September, 2014.
Sd/- Sd/-
(J. SUDHAKAR REDDY) (GEORGE GEORGE K)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: the 24th September, 2014
*manga
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ITA No. 3069/Del/2013
Assessment Year 2003-04
T.C.N.S. Ltd., New Delhi
Copy of the Order forwarded to:
1.Appellant;
2.Respondent;
3.CIT;
4.CIT(A);
5.DR;
6.Guard File
By Order
Asst. Registrar
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