Income Tax Appellate Tribunal - Chandigarh
Vardhman Acrylics Ltd., Ludhiana vs Department Of Income Tax on 4 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCH ' A', CHANDIG ARH
BEFORE SHRI T.R. SOOD, A.M AND Ms. SUSHMA CHOWLA, JM
ITA No. 988/Chd/2012
Assessment Year : 2005-06
A.C.I.T. V Vardhman Acrylics Ltd
Circle I Chandigarh Road
Ludhiana Ludhiana
AAACV 7602 E
(Appellant) (Respondent)
Appellant by Shri Manjit Singh
Respondent by: Shri Subhash Aggarwal
Date of hearing 11.6.2013
Date of Pronouncement 14.6.2013
O R D E R
PER T.R.SOOD, A.M
This appeal is directed against the order passed by the ld. CIT(A), Ludhiana dated 4.7.2012.
2. In this appeal the revenue has raised following ground:
"That the ld. CIT(A) has erred in law in deleting the penalty imposed by the Assessing Officer at Rs. 1,49,98,144/- u/s 271(1)(c) of the Act for not declaring sales tax subsidy as income despite of the fact that revised return was filed on 30.3.2007. The ld. CIT(A) further failed to appreciate that the assessee did not declare sales tax subsidy as income despite the fact that the Hon'ble Punjab & Haryana High Court had already held in its own case that Sales tax Subsidy is a revenue receipt."
3. After hearing both the parties we find that the assessee had a loss in view of carry forward losses under the normal provisions. However, book profit was assessed u/s 115JB of the Act at Rs. 23,80,74,148/-. It was noticed during the 2 assessment proceedings that the assessee has received sales tax subsidy amounting to Rs. 409,86,935/- from Government of Gujarat and the same was treated as capital receipt. The Assessing Officer after detailed discussion held the same to be of revenue nature following the decision of Hon'ble Punjab & Haryana High Court in case of Abhishek Industries, 286 ITR 1. He also initiated penalty proceedings u/s 271(1)(c). In response to show cause notice against penalty proceedings it was mainly stated that assessee's income has been assessed at a loss. Further the assessee has not concealed any particulars of any item of income and therefore, penalty was not leviable. The detailed submissions were made on the nature of scheme and why the same was treated as capital receipt. Reliance was also placed on various case laws. However, the Assessing Officer did not agree with the same and levy penalty at minimum of 100% amounting to Rs. 1,49,98,144/- u/s 271(1)(c) of the Act.
4 On appeal, penalty was deleted by the ld. CIT(A) on the basis of decision of Hon'ble Delhi High Court in case of CIT V. Nalwa Sons Investments Ltd. (2010) 327 ITR 543 (Delhi). 5 Before us, the ld. DR for the revenue relied on the order of Assessing Officer. He further relied on the order of Hon'ble Delhi High Court in case of CIT V. Zoom Communication P. Ltd. (2010) 327 ITR 510 (Delhi).
6 On the other hand, the ld. counsel of the assessee submitted that penalty is not possible in view of the decision of Hon'ble Delhi High Court in case of CIT V. Nalwa Sons 3 Investments Ltd. (supra). He also submitted that SLP filed by the revenue against this decision has been dismissed by the Hon'ble Supreme Court.
7 W e have heard the rival submissions carefully and find that Hon'ble Delhi High Court has clearly held that once the income is assessed under MAT provisions then there cannot be any concealment and penalty cannot be levied u/s 271(1)(c) of the Act. The observation of the Hon'ble Delhi High Court is as under:
" Under the scheme of the Income-tax Act, 1961, the total income of the assessee is first computed under the normal provisions of the Act and tax payable on such total income is compared with the prescribed 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, the book profits are deemed as the total income of the assesee in terms of section 115JB of the Act. Where the income computed in accordance with the normal procedure is less than the income determined by legal fiction, namely, the book profits under section 115JB of the Act and the income of the assessee is assessed under section 115JB and not under the normal provisions, the tax is paid on the income assessed under section 115JB of the Act. Concealment of income would have no role to play and would not lead to tax evasion. Therefore, penalty cannot be imposed on the basis of disallowance or additions made under the regular provisions. "
We further find that the decision of Hon'ble Delhi High Court in case of CIT V. Zoom Communication P. Ltd. (supra) is totally distinguishable because the penalty was deleted by the Tribunal by holding that there was no concealment. However, Hon'ble High Court reversed that decision. This decision is distinguishable because in case of CIT V. Nalwa Sons Investments Ltd. (supra) penalty has been deleted by holding 4 that no concealment can be inferred where income has been assessed u/s 115JB of the Act. Accordingly following the decision of Hon'ble Delhi High Court in case of CIT V. Nalwa Sons Investments Ltd. (supra), we hold that the ld. CIT(A) has correctly deleted the penalty.
8. In the result, appeal of the revenue is dismissed.
Order pronounced on 14.6.2013
Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD)
JUDICI AL MEMBER ACCOUNTANT MEMBER
Dated : 14.6.2013
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/The DR