Section 271(1)(c) r.w.s. 115JB of the Income-tax Act, 1961 — Penalty for concealment of income — Assessing returning income based on book profit — Pursuant to search action additional income declared — Total income as per normal provisions of the Act less

ITAT ‘D’ Bench, Mumbai

A.Ys. : 2003-2004 & 2005-2006

Decided on : 21-1-2011

Counsel for assessee/revenue :

Bhupendra Shah/Jitendra Yadav

The assessee was a company. During the years under appeal it
offered to tax its income computed u/s.115JB as its taxable income under the
normal provisions of the law was nil (on account of setting off of brought
forward losses). There was action u/s.132 of the Act and based on certain
incriminating documents found, the assessee offered to tax an additional income
of Rs.12 lakh and Rs.2.84 crores in the two years. However, on account of the
un-adjusted carried forward losses, its income under the normal provisions of
the Act still remained nil and the same amount of income, which was returned
earlier u/s.115JB, was assessed u/s.153A. The issue before the Tribunal was
whether the AO was justified in levying of penalty for concealment of
particulars of income by the assessee.

According to the Tribunal, the addition, in respect of which
the penalty was imposed, was made while computing total income under the normal
provisions of law. While ultimately, the total income of the assessee was
determined on the basis of book profit u/s.115JB of the Act. Therefore, relying
on the decision of the Delhi High Court in the case of CIT v. Nalwa
Investment Ltd., [(2010) 322 ITR 233] the Tribunal cancelled the penalty
imposed by the AO.