The case involves the DCIT Central Circle-29, New Delhi filing an appeal against Dharampal Satyapal Ltd, New Delhi for the assessment year 2011-12. The appeal contests the deletion of penalty levied under section 271(1)(c) of the Income Tax Act, 1961.
The Revenue filed two appeals against different orders of the Commissioner of Income Tax (Appeals)-30, New Delhi, dated 28.01.2021, for the assessment years 2010-11 and 2011-12, sustaining the penalty levied under section 271(1)(c) of the Income Tax Act, 1961.
The primary issue raised by the Revenue was the deletion of penalty proceedings initiated under section 271(1)(c) on 26.05.2014, while passing the assessment order under section 144(C)/143(3) of the Act. The Revenue contended that mere mistakes in the language used in the penalty notice and non-striking of the inapplicable portion cannot invalidate the notice, citing various court decisions to support their argument.
The assessee argued that since the income was assessed under MAT provisions in the consequential order giving effect to the Tribunal’s order, penalty provisions under section 271(1)(c) were not attracted. The assessee relied on the Delhi High Court decision in the case of CIT vs. Nalwa Sons Investments Ltd. and the Delhi Tribunal’s decision in the case of M/s. Samin Tekmindz India Pvt. Ltd. vs. ACIT.
On the other hand, the Department supported the Assessing Officer’s orders, arguing that penalty could still be levied even if the income was assessed under MAT provisions, citing various judicial precedents.
The Tribunal, after hearing the rival submissions and perusing the orders and decisions relied on, observed that the assessments for the assessment years 2010-11 and 2011-12 were completed under section 144C(4)/153A/143(3) by order dated 26.05.2014. The Tribunal noted that the income under normal provisions of the Act was more than the income declared under book profits, leading the Assessing Officer to assess the income under normal provisions.
The assessee preferred appeals, and the Tribunal, by order dated 18.04.2019, deleted certain additions/disallowances made in the assessment order while computing the income under normal provisions. The Assessing Officer then passed consequential orders, determining the income under normal provisions and book profits under section 115JB, ultimately assessing the income under section 115JB as it was higher.
The Tribunal, following the decision of the jurisdictional High Court in the case of CIT vs. Nalwa Sons Investments Ltd., held that no penalty under section 271(1)(c) could be imposed on additions/disallowances made while computing income under normal provisions if the income was finally assessed under section 115JB. Consequently, the Tribunal upheld the CIT(A)’s order deleting the penalty for both assessment years 2010-11 and 2011-12.
The Tribunal dismissed the Revenue’s appeals, reaffirming that penalty under section 271(1)(c) cannot be levied when the income is finally assessed under the provisions of section 115JB of the Act.
Order pronounced in the open court on 18/05/2023 by Judicial Member C. N. Prasad and Accountant Member M. Balaganesh.
Date of dictation: 16.05.2023
Date on which the typed draft is placed before the dictating Member: 17.05.2023
Date on which the typed draft is placed before the Other Member: 18.05.2023
Date on which the approved draft comes to the Sr. PS/PS: 18.05.2023
Date on which the fair order is placed before the Dictating Member for pronouncement: 18.05.2023
Date on which the fair order comes back to the Sr. PS/PS: 18.05.2023
Date on which the final order is uploaded on the website of ITAT: 18.05.2023
Date on which the file goes to the Bench Clerk: 18.05.2023
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant Registrar for signature on the order
Date of dispatch of the Order: 18.05.2023
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