Judgment of the above noted case
bearing ITA No. 1749 of 2010 was delivered by division bench of Hon’ble High
Court of Delhi comprising of Mr. Justice S. Ravindra Bhat and Mr. Justice R. V.
Easwar on 12th October, 2012.
Question in issue in above said appeal
by Department of Income Tax was "Whether penalty could be imposed
on the assessee, where additions are made on the normal provisions of the
Income Tax Act, but actually the taxable income of the assessee was assessed
not under the normal provisions instead under section 115JB and there is no
addition as far as book profit is concerned”
In order to
arrive at any conclusion, the hon’ble High Court relied on the judgment in CIT vs. Nalwa Sons Investments Ltd., (2010)
327 ITR 543. The said judgment was carried in appeal by Special Leave Petition
being SLP No.18564/2011 to the Supreme Court of India, which was dismissed on 04th
May 2012.
The ratio of the
above said relied judgment was that even if there could be concealment of
income by the assessee but that had its repercussions only when the assessment
done under the normal procedure, whereas in the instant matter, it is the deemed
income assessed under section 115JB of the Act has become the basis of
assessment as it was higher of the two. Tax is thus paid on the income assessed
under section 115JB of the Act. Hence, when the computation was made under
section 115JB 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 resulting in a circumstance where no addition could be added in book
profit. Hence, penalty could not be imposed thereon under section 271(1)(c) of the Income Tax Act.
In view of the
settled position in such situation, appeal by revenue authorities got
dismissed.
