Ruchi Strips & Alloys Ltd vs. DCIT (ITAT Mumbai)

DATE: (Date of pronouncement)
DATE: April 26, 2011 (Date of publication)

Click here to download the judgement (ruchi_penalty_book_profits_115JB.pdf)

Despite concealment, no s. 271(1)(c) penalty if s. 115JB book profits assessed

Pursuant to a search u/s 132 and the detection of incriminating documents, the assessee offered additional income. The AO computed the income under the normal provisions and levied penalty u/s 271(1)(c) for concealment of income. However, as the book profits computed u/s 115JB was higher, the assessee was assessed u/s 115JB. The assessee’s appeal against the levy of penalty u/s 271(1)(c) was rejected by the CIT (A). However, on appeal to the Tribunal, HELD:

The concealment of income had its repercussions only when the assessment was done under the normal procedure. If the assessment as per the normal procedure was not acted upon and it was the deemed income assessed u/s 115JB which became the basis of assessment, the concealment had no role to play and was totally irrelevant. The concealment did not lead to tax evasion at all

Note: The Delhi High Court judgement followed by the Tribunal (citation not given) is of Nalwa Sons Investments 327 ITR 543 (Del). The same view has been taken in S. V. Kalyanam 327 ITR 477 (Mad).

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