Ortel Communication Ltd., New Delhi vs Department Of Income Tax

Assistant CIT, vs. M/s. Ortel Communication Ltd., Circle 13(1), B-7/122-A , Safdarjung Enclave, New Delhi. New Delhi. (PAN: AAACO1004B) (Appellant) (Respondent)

Assessee by: Shri Manoj Gupta,F CA Department by: Shri P. Damkanjuna, Sr. DR

Date of hearing : 17.02.2015 Date of pronouncement: 16.04.2015

ORDER

PER I.C. SUDHIR: JUDICIAL MEMBER The Revenue has questioned first appellate order whereby the Learned

CIT(Appeals) has deleted the penalty levied under sec. 271(1)(c) of the

Income-tax Act, 1961 at Rs.15,03,986. At the outset of hearing, the Learned

AR pointed out that the issue raised in the present case is fully covered by

the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT

vs. Nalwa Sons Investments Ltd. (2010) - 327 ITR 543 (Del.) wherein also

the total income computed under regular provisions was less than book

profits, the Hon'ble High Court was pleased to hold that penalty under sec. 2 271(1)(c) cannot be levied on the assessment made under sec. 115JB of the

Income-tax Act, 1961.

2. The Learned DR on the other hand placed reliance on the penalty

order with this contention that there was concealment of particulars of

income and furnishing inaccurate particulars thereof on the part of the

assessee and thus the Assessing Officer was justified in imposing penalty on

the disallowance of fixed assets written off at Rs.44,68,170.

3. In rejoinder, the Learned AR submitted that there is no dispute that

books of account and financial statements were prepared by the assessee

company in accordance with the provisions of Companies Act, 1956 read

with accounting standards prescribed by the ICAI and were also audited

under the Companies Act as well as tax audit was conducted under the

Income-tax Act, 1961. He submitted that in the profit and loss account

prepared by the assessee company in schedule XIV, it had clearly and

unambiguously separately disclosed 'fixed assets written off Rs.44,68,170"

predominantly established that there was neither any intention to conceal the

income nor any concealment or inaccurate particulars of income were

furnished. Thus it is not a case of concealment of particulars of income or 3

furnishing inaccurate particulars thereof on the part of the assessee. The

Learned CIT(Appeals) was thus justified in deleting the penalty.

4. Having gone through the above cited decision of Hon'ble

jurisdictional Delhi High Court in the case of CIT vs. Nalwa Sons

Investments Ltd. (supra), we find that in that case the Hon'ble High Court

has been pleased to hold that where the income computed in accordance

with the normal procedure is less than the income determined by legal

fiction, namely, the book profits under sec. 115JB of the Act and the income

of the assessee is assessed under sec. 115JB of the Act and not under the

normal provisions, the tax is paid on the income assessed under sec. 115JB

of the Act, concealment of income would have no role to play and would not

lead to tax evasion, therefore, penalty cannot be imposed on the basis of the

disallowances or additions made under the regular provisions. Similar are

the facts of the present case before us, hence, respectfully following the

decision of Hon'ble jurisdictional Delhi High Court in the case of CIT vs.

Nalwa Sons Investments Ltd.(supra), we hold that the Learned CIT(Appeals)

has rightly deleted the penalty levied on the basis of assessment framed

under normal provisions keeping in mind that income computed in

accordance with the normal procedure is less than the income determined 4

under sec. 115JB of the Act. The First Appellate Order in this regard is thus

upheld. The ground is accordingly rejected.

5. In result, the appeal is dismissed.

Decision pronounced in the open court on 16 .04.2015

Sd/- Sd/-

( N.K. SAINI ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 16 /04/2015 Mohan Lal Copy forwarded to: 1) Appellant 2) Respondent 3) CIT 4) CIT(Appeals) 5) DR:ITAT ASSISTANT REGISTRAR

Date Draft dictated on computer 15.04.2015 Draft placed before author 15.04.2015 Draft proposed & placed before the second 16.04.2015 member Draft discussed/approved by Second Member. 16.04.2016 Approved Draft comes to the Sr.PS/PS 16.04.2015 Kept for pronouncement on 16.04.2015 File sent to the Bench Clerk 16.04.2015 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.