R.S. Syal, Accountant Member - This appeal by the Revenue emanates from the order passed by the CIT(A) on 4.12.2009 deleting the penalty of Rs. 23 lakh imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 (hereinafter also called 'the Act') in relation to the assessment year 1998-99.
2. Briefly stated the facts of the case are that the assessee filed its return declaring net loss of Rs. 2,07,90,899/- under the normal provision of the Act and income of Rs. 22,52,830/- u/s 115JA of the Act. The assessment was concluded u/s 143(3) of the Act by computing a positive total income under the normal provision of the Act at Rs. 1,83,56,802/-and income u/s 115JA at Rs. 34,03,022/-. In such assessment, the Assessing Officer made the following additions/disallowances:
| (i) Excess Expenses |
: Rs. 8,59,553/- |
(ii) Production Bonus |
: Rs. 47,50,000/- |
(iii) Disallowance u/s 43B |
: Rs. 35,183/- |
(iv) Interest earned |
: Rs. 2,996/- |
(v) Abandonment Reserve |
: Rs. 5,30,875/- |
(vi) Interest expenses |
: Rs. 98,391/- |
(vii) Reduction in exemption u/s 10A |
: Rs. 2,23,148/- |
Total |
: Rs. 65,00,146/- |
3. On the basis of the above additions/disallowances, the Assessing Officer imposed penalty to the tune of Rs. 23 lakh by observing that the assessee accepted the additions at serial No. i to vi above without raising any objection in appeals and the last addition of Rs. 2,23,148/- at serial no. vii. was unsuccessfully contested in appeal. The ld. CIT(A) ordered for the deletion of penalty. The Revenue is aggrieved against such deletion of penalty.
4. After considering the rival submissions and perusing the relevant material on record, we find that there are certain inconsistencies in the penalty order passed by the Assessing Officer in mentioning that the additions at serial no. i to vi were accepted by the assessee uncontested and lost its case in appeal in respect of addition at serial no. vii. We will deal with these items of disallowances one by one.
5. The first addition is towards excess expenses of Rs. 8,59,553/-. The ld. CIT(A) has mentioned in the impugned order that similar addition was made for the immediately succeeding assessment year 1999-2000 on which penalty imposed by the Assessing Officer came to be finally deleted by the tribunal. He has reproduced the relevant parts of the tribunal order on page 3 of his order by which penalty on such excess expenses was deleted. The ld. Departmental Representative could not controvert the factual position stated in the impugned order. Since the tribunal has ordered for the deletion of penalty on identical facts, respectfully following the precedent, we approve the view taken by the ld. CIT(A) in deleting penalty on this score.
6. The second item of addition on which penalty was imposed by the AO is disallowance of Production bonus amounting to Rs. 47,50,000/-. The correct factual position on this issue, as recorded on page 5 of the impugned order is that the assessee did not accept the addition made by the Assessing Officer but challenged the same, which was knocked down in the first appeal in the quantum proceedings. The ld. DR has failed to refute the finding in the impugned order that the Revenue did not carry this issue before the tribunal in quantum proceedings. Since, the bedrock for the penalty on this issue, being the addition of Rs. 47.50 lakh, does not exist, there can be no question of imposing or confirming any penalty on this amount. We echo the view taken by the ld. CIT(A) on this issue.
7. The third disallowance amounting to Rs. 35,183/- was made u/s 43B. The ld. CIT(A) has noted on page 4 of the his order that similar disallowance was made for the assessment year 1999-2000 and the tribunal was pleased to cancel penalty on this issue. The relevant portions from the tribunal order on this issue have also been extracted in the impugned order. In the absence of any distinguishing feature having been brought to our notice by the ld. DR on the facts of the instant year vis-à-vis those of the succeeding year, we are of the considered opinion that no fault can be found with the view canvassed by the ld. CIT(A) in deleting penalty on this issue. The same, is therefore, upheld.
8. The next item is interest income of Rs.2,996 which was earned but not offered for taxation. The AO noticed that the assessee directly took such amount to its balance sheet by crediting it to the reserve account. Penalty was imposed on such addition, which was erased in the first appeal.
9. Having heard both the sides on this issue and perused the relevant material on record, we find it as an admitted position that the assessee, in fact, earned such interest income of Rs. 2,996/- but instead of showing it as income directly took it to reserve account. The ld. AR also candidly admitted that this amount was rightly chargeable to tax. When a particular item of income earned by the assessee is routed to balance sheet without passing through the Profit and loss account, the natural interference which is to be drawn is that the assessee did not intend to offer such amount to tax. No explanation has been advanced on behalf of the assessee as to under which circumstances the amount was not offered for taxation but straightway taken to the reserve account in balance sheet. It is a clear cut case of concealment of income warranting the imposition of penalty. By overturning the impugned order, we hold that the penalty was rightly imposed by the AO on this amount. The view taken by the ld. CIT(A) on this score is ergo set aside.
10.1 The next item of addition on which penalty was imposed by the AO is Abandonment reserve amounting to Rs. 5,30,875/- representing the assessee's 25% share in expenses from Production Sharing Contract (PSC) for the exploration of crude oil, which was created by the assessee by way of a debit to the Profit and Loss account. The Assessing Officer held this amount to be a contingent liability not eligible for deduction. The assessee did not challenge this addition in further appeals. Thereafter, penalty was imposed on it which came to be deleted in the first appeal.
10.2 The ld. AR submitted that he was free to challenge the merits of the addition in the penalty proceedings notwithstanding its acceptance in the quantum proceedings. While inviting our attention towards a copy of the PSC, it was put forth that the same required all the parties to contract including the assessee to provide for Abandonment expenses on year to year basis towards Site Restoration at the end of the contract period. The ld. AR explained that the assessee claimed deduction for its share in the total abandonment cost of PSC @ 25% in accordance with the terms of such contract, to which the other parties are the Government of India and Oil India Ltd. etc. It was claimed that even though such amount was to be paid in a later year but the liability got crystallized during the year on prospecting of minerals etc. and hence was rightly deductible.
10.3 We find merit in the primary contention of the ld. AR that there can be no fetters on the powers of the parties before the tribunal to make out a case for non-imposition of penalty in respect of addition not challenged in the appellate proceedings. It is axiomatic that assessment and penalty proceedings are distinct from each other. The mere fact of the acceptance or confirmation of an addition cannot foreclose the doors to knock at for the deletion of penalty on such amount. Notwithstanding the fact that the addition was confirmed in the appeal or the assessee accepted such addition due to smallness of the amount or otherwise, the assessee is always entitled to prove in the penalty proceedings that the addition was not called for and consequently no penalty could be levied on it.
10.4 Now coming to the merits of this addition, we find that the assessee along with the Government of India and others under the PSC undertook to restore the site after the prospecting mineral oil etc. at the end of the stipulated period. As per the PSC, the parties were bound to restore the site to its original position by incurring expenses which were estimated on a scientific basis. The amount under dispute is the assessee's share in such estimate of site restoration expenses to be incurred under the PSC. Even though the site was to be restored to the original position at the end of the stipulated period, but the extent of the damage caused to the site on yearly basis was capable of quantification, which exercise was done by the Consortium and the total amount of expenses on restoration was estimated. The assessee incurred liability towards such Site Restoration at the end of each year after prospecting mineral oil etc. from the site on matching principle. The amount of such abandonment cost fell on the assessee at the end of each year though it was to be discharged at the end of the stipulated period. Under the mercantile system of accounting, an expense is allowed as deduction on incurring the liability irrespective of the actual discharge. At any rate, it cannot be ruled out that the assessee took a possible view in claiming deduction for the said amount. If that is the case, then the issue comes within the ambit of a debatable issue. There is no dearth of judgments holding that where two possible views exist and the assessee has taken one of them, then the penalty is not leviable, if the possible view canvassed by the assessee is not accepted. In this backdrop of the facts, we find that the assessee has prima facie demonstrated that the deduction claimed by it for such Abandonment cost is a possible view despite the same having not been challenged in the quantum proceedings. Ex consequenti, we hold that no penalty is exigible on such addition.
11.1 The next item of addition is a sum of Rs. 98,391/- disallowed out 'Interest expenses'. The assessee claimed deduction for the amount, which was not allowed by the Assessing Officer. Thereafter, penalty was imposed on it, which got deleted in the first appeal.
11.2 This disallowance of interest comprises of four items. The first component is a sum of Rs. 71,432/-, being the amount of income-tax debited by the assessee and claimed as interest expense. It is a settled legal position that payment of income-tax is not an item of expenditure. The amount of income-tax is an item of appropriation of income and not a charge against the income. In fact, the amount of income-tax can be ascertained only after the amount of profit is first determined. What to talk of claiming deduction for payment of income-tax, even the interest paid for payment of income-tax is not an allowable deduction as has been held by the Hon'ble Supreme Court in Bharat Commerce & Industries Ltd. v CIT [1998] 230 ITR 733/98 Taxman 151. The Hon'ble Supreme Court has held that : 'The liability in the case of payment of income-tax and interest for delayed payment of income-tax or advance tax arises on the computation of the profits and gains of business. The tax which is payable is on the assessee's income after the income is determined. This cannot, therefore, be considered as an expenditure for the purpose of earning any income or profits. Interest which is paid for delayed payment of advance tax on such income cannot be considered as expenditure wholly and exclusively for the purpose of business. Under the I.T. Act the payment of such interest is inextricably connected with the assessee's tax liability. If income-tax itself is not a permissible deduction under s. 37, any interest payable for default committed by the assessee in discharging his statutory obligation under the I.T. Act, which is calculated with reference to the tax on income cannot be allowed as a deduction.' In view of the fact that the assessee claimed deduction for payment of income-tax by clubbing it with 'Interest expenditure', which amount is clearly not allowable even as per the law laid down by the Apex Court way back in 1998, we have absolutely no doubt in mind that the provisions of sec. 271(1)(c) of the Act were rightly magnetized.
11.3 Similar is the position of interest on late deposit of Wealth-tax amounting to Rs. 19,084/-. The amount of wealth-tax is also not an allowable deduction as per the clear terms of section 40(a)(iia) of the Act. When the amount of wealth tax itself is not deductible, evidently the amount of interest on late deposit of such wealth tax also ceases to be deductible as per the law enunciated in Bharat Commerce & Industries Ltd. (supra). The assessee's action in claiming deduction for the amount of income-tax paid and interest on wealth-tax is vividly in breach of the unambiguous provisions of the Act and the law laid down by the highest court of the land. There is neither any case nor it can be that the assessee claimed deduction for such amount under some bona fide belief. As the assessee claimed deduction for such ex facie non-deductible amounts by including them under the head 'Interest expenditure', we are of the considered opinion that the assessee rightly deserves to be visited with penalty u/s 271(1)(c) of the Act on this issue. We order accordingly.
11.4 In so far as the other two components, being Sales-tax and interest on late deposit of sales tax, are concerned, it has been brought to our notice that the tribunal has deleted penalty on similar amounts for the assessment year 1999-2000. Respectfully following the precedent, we hold that no penalty can be imposed on these two amounts.
12. The last item of addition is of reduction in the benefit u/s 10A of the Act to the tune of Rs. 2,23,148/-. Here again, the ld. CIT(A) has recorded that the tribunal has allowed deduction for such amount in quantum proceedings. Relevant discussion has been made on bottom of page 5 of the impugned order. Since, the addition itself has been finally deleted, there can be no question of imposing any penalty thereon.
13. Thus, it can be seen from the above discussion that we have reversed the order of the ld. CIT(A) by restoring the penalty u/s 271(1)(c) of the Act in respect of three items, viz., Interest of Rs. 2,996/-earned but not declared as income; amount of Income-tax paid at Rs. 71,432/- claimed as deduction by clubbing with Interest expenditure ; and interest on late deposit of wealth-tax amounting to Rs. 19,084/-claimed as deduction by clubbing with Interest expenditure.
14.1 The assessee has filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 requesting for the deletion of entire penalty on a legal issue, being the final determination of total income of the assessee u/s 115JA of the Act and the additions sustained pertaining only to the income computed under the normal provisions of the Act. The ld. AR relied on the judgment of the Hon'ble jurisdictional High Court in CIT v. Nalwa Sons Investments Ltd. [2010] 327 ITR 543/194 Taxman 387 (Delhi) to propel this submission.
14.2 Before proceeding with the matter on merit, it would be apposite to first decide about the maintainability or otherwise of such application. Rule 27 of ITAT Rules, 1963 with its marginal note reads as under :—
'Respondent may support order on grounds decided against him.
The respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him.'
14.3 The effect of this rule is that a respondent has been entitled to support the order on the ground which has been decided against him. The underlying idea and the spirit of Rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavourable decision of the CIT(A) on the aspect(s) of an issue, the final decision on which issue has been delivered in his favour. Take an instance of first appellate authority deciding the legal issue of reopening of an assessment against the assessee but deleting the addition on merits in favour of the assessee. When the Revenue files appeal against this order before the tribunal, it will naturally assail the finding of the CIT(A) qua the deletion of addition on merits. Notwithstanding the fact that the respondent assessee did not file any appeal against the order passed by the CIT(A), shall still be entitled under Rule 27 of the ITAT Rules, 1963, to support the conclusion of the order of the first appellate authority, being the deletion of addition, by challenging the finding of the CIT(A) which was delivered against him on the legal issue of reopening of assessment.
14.4 The mandate of Rule 27 is to be seen in contradistinction to the provisions of section 253(4) of the Act, which empower the respondent, on an appeal filed by the plaintiff, to file cross objection against any part of the order. At this stage, it may be fruitful to take note of the prescription of sec. 253(4), which provides that : ' The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) or the Assessing Officer in pursuance of the directions of the Dispute Resolution Panel has been preferred under sub-section (1) or sub-section (2) or sub-section (2A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof; within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Assessing Officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3) or sub-section (3A).' When we consider Rule 27 of the ITAT rules in juxtaposition to sec. 253(4) of the Act, the position which emerges is that whereas rule 27 is a remedy to the respondent to 'support' the ultimate favourable conclusion of the CIT(A) by challenging such aspects of the issue which were decided against him, a cross objection u/s 253(4) of the Act is a remedy to the respondent to 'challenge' the ultimate unfavourable conclusion of the CIT(A).
14.5 A cursory look at the language of rule 27 transpires that a respondent has been empowered to support the order appealed against on any of the grounds 'decided against him.' In other words, the challenge can be made by a respondent only in respect of a 'ground decided against him'. In such circumstances, a question arises that if there is no decision at all of the CIT(A) on a particular aspect, which is otherwise germane to the overall issue decided in favour of the respondent, can the respondent espouse such aspect under rule 27 in an appeal filed by the plaintiff ? If we go by the literal interpretation of the Rule, then the answer is in negative that unless the ground is not 'decided against' the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff. A pragmatic approach on consideration of the object of such Rule, in our considered opinion, necessitates the adoption of liberal interpretation that when a particular issue is decided in favour of the respondent and the plaintiff has come up in appeal against such decision on the issue, then all the relevant aspects having bearing on the overall issue, even though not specifically decided against the plaintiff, should be open for challenge by the respondent under the rule. If the respondent is debarred from raising that aspect of the issue, which was not taken up before the first appellate authority or taken up but remained undecided, and the appeal of the plaintiff is allowed, the respondent would be rendered without remedy. It has been noticed above that a respondent is not entitled to file cross objection on such aspects of the issue u/s 253(4) of the Act, the scope of which provision is circumscribed to challenging the ultimate unfavourable conclusion drawn by the CIT(A). In common parlance, when an issue is decided in favour of one party whether on one aspect or the other, it is not expected of such a party to challenge the order by asserting that the decision should have been given in his favour on that issue on all the aspects and not on that particular aspect on which it was given. When an appeal is filed against such favourable decision on the issue by the other party, and suppose the impugned order is not sustainable on that aspect of the issue on which it was decided, but on some other aspect which was not decided by the first appellate authority and the respondent is restrained from taking up such aspect on the reasoning that Rule 27 is not applicable on such aspect, the respondent would stand nowhere. In view of the foregoing discussion, it is clear that hyper technicalities of rule 27 cannot come in the way of the deciding such aspects of the issue taken up by the respondent before the tribunal which were germane to the main issue but were not contested or decided provided no fresh investigation of facts is required for rendering decision on such aspects.
14.6 Reverting to the facts of the extant case, it is observed that the assessee is a respondent in this appeal filed by the Revenue in which the principal issue about the penalty was decided by the ld. CIT(A) in assessee's favour. In that view of the matter there could have been no occasion for the assessee to file any cross appeal or cross objection against the order passed by the ld. CIT(A) or to contest that the penalty is also not maintainable because despite there being loss under the normal provisions of the Act, the income was finally determined u/s 115JA of the Act. In support of this proposition that penalty is not sustainable, the ld. AR relied on the judgment of the Hon'ble jurisdictional High Court in Nalwa Sons Investments Ltd. (supra). As the facts of the instant case prima facie appear to have some resemblance to those considered and decided in Nalwa Sons Investment Ltd. (supra), we admit the application under Rule 27 for consideration on merits.
15.1 At the cost of repetition, we once again note that the assessee filed its return declaring net loss of Rs. 2,07,90,899/- under the normal provision of the Act and declaring income of Rs. 22,52,830/- u/s 115JA of the Act. The assessment was concluded u/s 143(3) of the Act by computing a positive total income under the normal provision of the Act at Rs. 1,83,56,802/- and income u/s 115JA at Rs. 34,03,022/-. The assessee in its application under Rule 27 has stated that after giving effect to the orders of the CIT(A)/ITAT, the income of the assessee was finally assessed u/s 115JA at Rs. 27,06,612/- which was higher than the loss under the normal provisions of the Act determined at Rs. 4,68,443/-as against income of Rs. 2.07 crore originally declared by the assessee.
15.2 Before considering the applicability of the ratio decidendi in the case of Nalwa Sons Investments Ltd. (supra), let us see the facts and the decision in that case. The assessee in that case filed return declaring loss of Rs. 43.47 crore and revised return declaring income at Rs. 3.86 crore u/s 115JB of the Act. The assessment was completed u/s 143(3) at a loss of Rs. 36.95 crore as per the normal provisions and at book profit of Rs. 4.01 crore u/s 115JB of the Act. While doing so, the Assessing Officer disallowed the claim of depreciation to a certain extent and also denied deduction u/s 80HHC apart from making a small disallowance u/s 43B. Thereafter, penalty was imposed. When the matter finally came up before the Hon'ble High Court, the ld. Counsel representing the assessee, inter alia, contended before their Lordships that no penalty could be imposed as the assessee had paid the tax at deemed income u/s 115JB of the Act which was more then the income assessed as per normal provisions of the Act. The Hon'ble High Court accepting the assessee's contention ruled as under:—
"No doubt, there was concealment but that had its repercussions only when the assessment was done under the normal procedure. The assessment as per the normal procedure was, however, not acted upon. On the contrary, it is the deemed income assessed under s. 115JB of the Act which has become the basis of assessment as it was higher of the two. Tax is thus paid on the income assessed under s. 115JB of the Act. Hence, when the computation was made under s. 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."
15.3 It is manifest from the above judgment that their Lordships ordered for the deletion of penalty on the ground that the computation of income u/s 115JB of the Act was not affected by the concealment, which had only impacted the computation of income under the normal provisions of the Act.
15.4 The impact of the judgment can be properly appreciated with the help of a simple example. Take an instance of the income returned by an assessee under the MAT provisions at Rs.100 and under the regular provisions of the Act at a loss of Rs. 60. If addition leading to the concealment or furnishing of inaccurate particulars is made, say for a sum of Rs. 10, then the loss of the assessee under the regular provisions of the Act would stand reduced to Rs. 50. Sec. 115JA(3) of the Act provides that : ' Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) of section 74A.' As per the prescription of the sub-section (3), the assessee would be entitled to carry forward loss under the regular provisions of the Act for set off in the subsequent year subject to the relevant provisions. It means that now with the making of addition of Rs.10, the assessee would be entitled to carry forward the amount of reduced loss of Rs.50 to subsequent years for set off, which would otherwise have been at Rs.60 but for the addition. The nitty gritty of the judgment in Nalwa Sons Investments Ltd. (supra) is that since the assessee is still liable to pay tax under the MAT provisions of sec. 115JA on the income of Rs.100, no penalty u/s 271(1)(c) can be levied on the assessee w.r.t. the addition of Rs.10 to the income under the regular provisions of the Act. The rationale of the judgment is that when the computation is made under s. 115JA or sec. 115JB of the Act, then the concealment of Rs. 10 has no role to play and is totally irrelevant and hence such concealment cannot lead to tax evasion at all.
15.5 When we apply the ratio of this judgment to a converse case of an assessee returning income under MAT provision at Rs.100 and positive income under the regular provisions of the Act at Rs. 60. If addition leading to the concealment or furnishing of inaccurate particulars is made, say for a sum of Rs. 10, then the income of the assessee under the regular provisions of the Act would increase to Rs. 70. At this juncture, it is relevant to note the provisions of sub-sections (1) and (2) of section 115JAA. Sub-section (1) provides that : 'Where any amount of tax is paid under sub-section (1) of by an assessee being a company for any assessment year, then, credit in respect of tax so paid shall be allowed to him in accordance with the provisions of this section. And sub-section (2) states that : 'The tax credit to be allowed under sub-section (1) shall be the difference of the tax paid for any assessment year under sub-section (1) of sec. 115JA and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act'. A conjoint reading of sub-sections (1) and (2) divulges that an assessee gets credit for tax paid to be set off against the actual tax liability of the subsequent years determined on the basis of positive income under the regular provisions of the Act, to the extent of difference between the income determined as per the regular provisions of the Act and MAT provisions u/s15JA for the current year. In our example, the benefit of tax credit available, by virtue of the addition of Rs.10, shall reduce to the extent of tax on the income of Rs.30 (Rs.100 - Rs.70) which would otherwise have been pegged at tax on the income of Rs.40 (Rs.100 - Rs.60). It is because of the addition of Rs.10 made by the AO under the regular provisions of the Act, which no doubt did not change the tax liability for the current year computed on the basis of income u/s 115JA, but has the effect of restricting the amount of tax credit available to the assessee. As the assessee is still liable to pay tax under the MAT provisions of sec. 115JA on the income of Rs.100 for the current year, applying the essence of the judgment by the Hon'ble jurisdictional High Court in the case of Nalwa Sons Investments Ltd. (supra), no penalty u/s 271(1)(c) of the Act can be levied on the assessee w.r.t. the addition of Rs.10 to the income under the regular provisions of the Act for the current year because the computation made under s. 115JA or sec. 115JB of the Act is unaffected with the concealment of Rs. 10.
15.6 The crucial part of the judgment in the case of Nalwa Sons Investments Ltd. (supra), is that : 'When the computation was made under s. 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. The ratio decidendi of the decision which ergo follows is that if there is certain concealment of income touching only the computation of income under the normal provisions of the Act but the final income is determined u/s 115JB which is unaltered because of the items of concealment of income, then no penalty can be imposed u/s 271(1)(c) of the Act in the light of its Explanation 4(a). It is impermissible to read this judgment as laying down a universal principle that if income is computed under Chapter XII-B of the Act covering secs. 115JA and 115JB etc., then there can never be any penalty u/s 271(1)(c) of the Act. Going by the judgment, the penalty would be very much attracted where the addition leading to the concealment or furnishing of inaccurate particulars affect the computation of income under this Chapter as well. If the items of concealment of income are strictly within the realm of the normal provisions of the Act not affecting the computation of income under Chapter XII-B of the Act and there is a loss under such normal provisions, then, of course, the judgment of the Hon'ble jurisdictional High Court would have its full impact to take away the case from the clutches of section 271(1)(c) of the Act. But where the addition leading to the concealment, apart from altering the total income under the normal provisions of the Act, also enhances the computation of income under Chapter-XII-B of the Act, the penalty would be very much leviable on the amount represented by such increase in the deemed income u/s 115JA etc. because of addition leading to concealment.
15.7 The assessee in his application under Rule 27 has stated that after giving effect to the orders passed by the CIT(A)/ITAT, the income of the assessee stood finally assessed u/s 115JA at Rs. 27,06,612/- which was higher than the loss under the normal provisions of the Act determined at Rs. 4,68,443/- against Rs. 2.07 originally declared by the assessee. However, a copy of such computation of income giving effect to the orders of CIT/ITAT was not placed on record. It can be noticed that the assessee filed its return declaring income of Rs. 22.52 lakh u/s 115JA of the Act. As per the assessee's own version given in the application filed under Rule 27 of the ITAT Rules, 1963, the deemed income u/s 115JA, after giving appeal effect, comes to Rs. 27.06 lacs. It is discernible that there is definitely an increase in the income computed u/s 115JA to the extent of Rs.4.54 lakh (Rs.27.06 lakh - Rs.22.52 lakh). Thus it is palpable that the contention of the ld. AR that no penalty is imposable because the income was finally computed u/s 115JA and there was loss under the normal provisions of the Act, is devoid of merits in the facts and circumstances of the present case. Because of some additions, there has resulted an increase in the income computed u/s 115JA as well. While dealing with the merits of penalty de hors the proposition laid down in Nalwa Sons Investments Ltd. (supra), we have held above that the penalty is sustainable in respect of three items. As the computation of total income after giving appeal effect is not available before us, we set aside the impugned order and remit the matter to the file of A.O for considering the imposition of penalty, if any, with reference to the above three items in the light of discussion made above.
16. In the result, the appeal is partly allowed for statistical purposes.