Novus Gbs Private Limited (Formerly ... vs Assessee

ITA No.132/Hyd/2015 : Assessment year 2010-11

M/s. Novus GBS Private limited V/s. Income Tax Officer, Ward 3(1), (Formerly known as Sheela Hyderabad Technologies Pvt. Ltd.) Hyderabad

(PAN - AAKCS 5244 H )

(Appellant) (Respondent)

Appellant by : Shri K.C.Devadas

Respondent by : Shri Rajat Mitra DR

Date of Hearing 28.4.2015 Date of Pronouncement 01.05.2015

ORDER

Per G.C.Gupta, Vice President:

This appeal by the assessee for the assessment year 2010-11 is directed against the order of the Commissioner of Income-tax (Appeals) IV, Hyderabad.

2. Grounds of the assessee are as under-

"1. The learned CIT(A) failed to appreciate that where deemed income under section115JB forms the basis of assessment being higher than the income determined under the normal provisions, the income so assessed under MAT cannot constitute concealment and would lead to evasion of tax for imposing penalty either for concealment of for furnishing inaccurate particulars of income as decided in a plethora of cases. The penalty is therefore liable to be deleted.

2. The learned CIT should have appreciated that the preponderance of judicial opinion on the issue 2 ITA No.132/Hyd/2015 M/s. Novus GBS Private Limited (Formerly known as Sheela Technologies Pvt. Ltd.) Hyderabad

supports the case of the appellant and therefore, principles enunciated in these cases supporting the case of the appellant should have been adopted in preference over a single case. The learned CIT(A) ought to have distinguished the cases cited by the appellant before applying the decision in the case of Sri Gokulam India P. Ltd. dt.19.07.2014(Madras).

3. Without prejudice to the above proposition that no penalty is imposable on the deemed income computed under section 115JB, it is submitted that the incorrect computation of profit under section 115JB arose out of bona fide inadvertence on the part of the accountant but not out of any contumacious/- deliberate conduct on the part of the appellant so as to attract penalty arising out of computational error when all the facts were disclosed before the department including the audit report. That a computational error, when all the details are furnished/available, is not liable to penalty is well settled."

3. The learned counsel for the assessee submitted that the only issue involved in this appeal relates to validity of the penalty imposed under S.271(1)(c) of the Act. He submitted that it was a mistake on the part of the assessee to claim deduction under S.10A while computing the book profit under the provisions of S.115JB of the Act. He submitted that the income determined under the MAT provisions could not constitute concealment or filing of inaccurate particulars of income. He submitted that all the facts were disclosed by the assessee at the time of assessment itself. He referred to the relevant portion of the penalty order passed by the Assessing Officer under S.271(1)(c) of the Act in support of his plea that all the facts are disclosed by the assessee at the time of assessment. He relied on the decision of the Hon'ble Apex Court in the case of Price Waterhouse Coopers Pvt. Ltd. V/s. CIT (348 ITR

306).

3 ITA No.132/Hyd/2015 M/s. Novus GBS Private Limited (Formerly known as Sheela Technologies Pvt. Ltd.) Hyderabad

4. The Learned Departmental Representative has opposed the submissions of the learned counsel for the assessee. He submitted that in Form No.29, the Chartered Accountant of the assessee has determined the book profit of the assessee. He submitted that it is wrong to say that this is the first year of e-filing of return by the assessee and in fact, the e-filing of return has started from the assessment year 2007-08 onwards. He referred to the relevant portions of the penalty order passed by the Assessing Officer and the appellate order passed by the CIT(A) in support of the case of the Revenue. He has relied on the orders of the Assessing Officer and the CIT(A).

5. We have considered the rival submissions and perused the orders of the Assessing Officer and the CIT(A). We find that the assessee has made a claim under S.10A of the Act for deduction, while computing the book profit under the special provisions of the Act. The deduction under S.10A was not allowable to the assessee as per the provisions of the Act, and it was disallowed. However, all the material facts relevant for assessment were disclosed by the assessee at the time of filing of the return itself. A perusal of the penalty order shows that it was the assessee, who has disclosed all the relevant figures before the Assessing Officer and has filed the calculation of book profits under S.115JB of the Act, after claiming exemption under S.10A of the Act. It is correct that the assessee company has e-filed the return of income for the earlier year also, but that is not decisive of the issue. The conduct of the assessee is bona fide and it is not the law that wherever there is a disallowance or rejection of a claim or deduction, claimed by the assessee, it shall lead to levy of penalty for concealment of income or filing of inaccurate particulars of income. The decision of the Hon'ble Apex Court in the case of Price Waterhouse Coopers Pvt. Ltd. V/s. CIT 4 ITA No.132/Hyd/2015 M/s. Novus GBS Private Limited (Formerly known as Sheela Technologies Pvt. Ltd.) Hyderabad

(348 ITR 306) supports the case of the assessee. In this case before the Apex Court, in the statement of particulars filed with the return of income, provision towards gratuity was shown as not allowable, but deduction was claimed in the return of income. It was held by the Hon'ble Apex Court that it was possible that even the assessee could make 'silly' mistakes, and all that had happened was that through a bona fide and inadvertent error, the assessee while submitting its return failed to add the provision for gratuity to its total income, and held that the imposition of penalty was not justified. In the facts of the present case, we are of the view that all the material facts were disclosed by the assessee at the time of assessment, and the conduct of the assessee was bona fide and in the absence of any material brought on record on behalf of the Revenue to suggest that the assessee's mistake was not bona fide or inadvertent, we hold that it is not a fit case for levy of penalty on the assessee for concealment of income or furnishing of inaccurate particulars of income. Accordingly the penalty levied under S.271(1)(c) of the Act is cancelled and the grounds of appeal of the assessee are allowed.

6. In the result, appeal of the assessee is allowed.

Order pronounced in the court on 1st May, 2015

Sd/- Sd/-

(P.M.Jagtap) (G.C.Gupta) Accountant Member Vice President

Dt/- April, 2015 5 ITA No.132/Hyd/2015 M/s. Novus GBS Private Limited (Formerly known as Sheela Technologies Pvt. Ltd.) Hyderabad

Copy forwarded to:

1. M/s. Novus GBS Private limited (Formerly known as Sheela Technologies Pvt. Ltd.) Plot No.13, Flat no.3101, Cyber Heights Complex, HUDA Layout, Road No.2, Banjara Hills, Hyderabad, Telangana 500 033

2. Income Tax Officer Ward 3(1), Hyderabad

3. Commissioner of Income-tax(Appeals) IV Hyderabad

4. Commissioner of Income-tax III Hyderabad Departmental Representative, ITAT, Hyderabad.

B.V.S