E v. DCIT Circle
Case Details
Page 1 of 15 (Tax Case No.91/2024) SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.04.11 18:35:29 +0530 2025:CGHC:16667-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 91 of 2024 {Arising out of order dated 14-12-2023 passed by the Income Tax Appellate Tribunal, Raipur Bench, Raipur, in ITA No.2/RPR/2023} Chhattisgarh State Power Transmission Company Limited, 2nd Floor, SLDC Building, CSEB Office, Raipur (C.G.) Pan: AADCC5773E ... Appellant versus DCIT Circle-1(1), Raipur, C.G. ... Respondent For Appellant : Mr. Apurv Goyal and Mr. Nikhilesh Begani, Advocates. For Respondent : Mr. Ajay Kumrani, Advocate on behalf of Mr. Amit Chaudhari, Advocate. Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Deepak Kumar Tiwari, JJ. Order On Board (09/04/2025) Sanjay K. Agrawal, J. 1. This tax appeal preferred under Section 260A of the Income Tax Act, 1961 (for short, ‘the IT Act’) was admitted for hearing Page 2 of 15 (Tax Case No.91/2024) by formulating the following substantial question of law, on 1- 5-2024:- “Whether in view of the voluntary disclosure of the income which is said to be feeding mistake, the imposition of penalty by the Assessing Officer under Section 271 (1) (c) of Income Tax Act, 1961 was correct?” 2. The assessee/appellant herein is a Public Limited Company and formulated under the provisions of the Electricity (Supply) Act, 1948. The appellant Company holds the status of a ‘Government Company’ under the provisions of Section 617 of the erstwhile Companies Act, 1956, now Section 2(45) of the Companies Act, 2013. The appellant Company/assessee is engaged in the business of providing/rendering extra high voltage power transmission services through its voltage power sub-stations (132 KV & above) and transmission lines throughout the State of Chhattisgarh. On 29-11-2016, the appellant filed its return of income for the assessment year 2016-17 declaring a total income of nil {after setting off the unabsorbed loss of ₹ 14.64 crores (approx.)}. Further, the book profits declared by the appellant in accordance with the provisions contained in Section 115JB of the IT Act ‘Minimum Alternate Tax’ (MAT) was to the extent of ₹ 26.90 crores Page 3 of 15 (Tax Case No.91/2024) (approx.). On 1-12-2016, the statutory audit was completed by the Auditor appointed by the C&AG as required under the provisions of Section 143 of the Companies Act, 2013 certifying the net profit before tax at ₹ 3574.90 lakhs based on the Audited Financial Statements. The tax audit completed by the Auditor and the Tax Audit Report in Form No.3CA/3CD under Section 44AB of the IT Act was furnished online on 15-12-2016 reporting the net profit before tax at ₹ 3574.90 lakhs based on the Audited Financial Statements. On 26-3-2018, revised return of income was filed by the appellant on the basis of and accompanied by the tax audit report in Form Nos.3CA/3CD, audited annual financial statements and report of the auditor. The appellant declared a total income of nil {after setting off unabsorbed loss of ₹ 93.48 crores (approx.)}. Further, the book profits declared by the appellant in accordance with the provisions of Section 115JB of the IT Act ‘Minimum Alternate Tax’ (MAT) was to the extent of ₹ 26.90 crores (approx.). Finally, on 9-8-2018, the case of the appellant assessee was selected for scrutiny assessment by issuance of mandatory notice under Section 143(2) of the IT Act under CASS by the Assistant Commissioner of Income Tax, Circle-4(1), Raipur i.e. the Assessing Officer (AO) and statutory notices were issued Page 4 of 15 (Tax Case No.91/2024) accordingly. On 23-10-2019, the appellant filed detailed response to the queries raised by the AO supported by documentary evidence. Ultimately, on 22-11-2019, during the course of assessment proceedings, the appellant vide reply dated 5-11-2019 (delivered to the AO by hand on 22-11-2019 and sent by mail on 21-11-2019), on its own volition, informed the AO about the difference in the figures of book profit for the purposes of computation of MAT under Section 115JB which was declared as ₹ 26,89,97,367/- instead of ₹ 35,74,90,033/- (total difference of ₹ 8,84,92,666/-) attributing the same to inadvertent data feeding mistakes in the return filed. However, vide reply dated 6-12-2019, on its own volition, the appellant/assessee returned the submission informing the AO about not disallowing the provision for gratuity while computing business income and accordingly, provided a revised computation of total income with revised income tax return form with corrected figures of book profit for the purposes of computation of MAT under Section 115JB of the IT Act. Ultimately, the Assessing Officer by its order dated 14-12-2019 passed assessment order under Section 143(3) of the IT Act acceding to the claim of the appellant to allow the revised figures of book profit, but she (AO) was of the view that the Page 5 of 15 (Tax Case No.91/2024) appellant had not made true and correct disclosure and therefore penalty proceedings under Section 271(1)(c) of the IT Act were initiated against the appellant for furnishing inaccurate particulars of the income, which the appellant refuted and filed response stating that variation in the figure of book profit has occurred due to inadvertent data feeding mistake in the return of income hence, the penal proceedings initiated under Section 271(1)(c) of the IT Act be dropped. 3. By order dated 29-1-2022, the AO imposed a penalty of ₹ 2,72,92,117/- on the appellant under Section 271(1)(c) of the IT Act alleging that the appellant has tried to furnish inaccurate particulars of income and thereby sought to evade tax. Feeling aggrieved against the order imposing penalty dated 29-1-2022, the appellant filed appeal under Section 250 of the IT Act before the CIT (Appeals) in Form No.35 questioning the order of penalty holding that it was bona fide mistake and it has already been disclosed in reply dated 5-11-2019, delivered on 22-11-2019, and Tax Audit Report has already been filed in Form No.3CA/3CD conducted under Section 44AB of the IT Act on 15-12-2016 and later-on in the revised return of income filed on 26-3-2018 along with tax audit report, audited annual Page 6 of 15 (Tax Case No.91/2024) financial statements and report of the auditor, and therefore the penalty order be set aside. 4. The CIT (Appeals) by order dated 15-11-2022, accepted the appeal of the appellant on merits thereby setting aside the penalty imposed against the addition of ₹ 8,84,92,855/- holding that mismatch in the figures of book profit was a case of feeding mistake and data transmission error and therefore there was no mala fide intention on the part of the appellant being a Government entity. 5. Questioning the order dated 15-11-2022, the Revenue preferred an appeal under Section 253 of the IT Act before the Income Tax Appellate Tribunal (ITAT) and cross-objection was also preferred by the appellant, however, ultimately, by the impugned order, the ITAT allowing the appeal of the Revenue has set aside the order dated 15-11-2022 passed by the CIT (Appeals) by restoring the order of penalty dated 29-1-2022 on account of variation in the book profit to the extent of ₹ 8.84 crores (approx.), which the appellant herein/assessee has called in question by way of the instant appeal.
Legal Reasoning
6. Mr. Nikhilesh Begani, learned counsel appearing for the appellant/assessee, would submit that the appellant had Page 7 of 15 (Tax Case No.91/2024) already furnished the tax audit report in Form No.3CA/3CD conducted under Section 44AB of the IT Act reporting the net profit before tax at ₹ 3574.90 lakhs, that too before initiating the assessment proceedings on 9-8-2018 and further, on 22-11- 2019 while making submission reiterated the same on 6-12- 2019, as such, there was bona fide act on the part of the appellant and it is only a data feeding mistake, therefore, would not fall within the mischief of Section 271(1)(c) of the IT Act and as such, the order of the ITAT deserves to be set aside and the order of the CIT (Appeals) be restored. Reliance has been placed upon the decisions of the Supreme Court in the matters of Price Waterhouse Coopers Private Limited v. Commissioner of Income Tax, Kolkata-I and another1, Commissioner of Income Tax, Ahmedabad v. Reliance Petroproducts Private Limited2 and Sree Krishna Electricals v. State of Tamil Nadu and another3 to buttress his submission. 7. Mr. Ajay Kumrani, learned counsel appearing for the respondent/Revenue, would support the impugned order and submit that the ITAT is absolutely justified in upholding the penalty imposed upon the appellant/assessee which the