2005 (10) TMI 87 - HC - Income Tax

Penalty Concealment of Income - where finally assessed income was a loss and there was no positive income, no penalty was imposable

Summary

Issues:
1. Appellate Tribunal's authority to cancel penalty under section 271(1)(c) in case of loss.

Analysis:
The High Court addressed the issue of whether the Appellate Tribunal was correct in canceling the penalty levied under section 271(1)(c) of the Act on the ground that the penalty cannot be imposed in case of a loss. The appellant-Revenue argued that the Tribunal's decision was erroneous in law, citing a decision by the Bombay High Court. The Commissioner of Income-tax (Appeals) had relied on a previous decision regarding the imposition of penalties in cases of loss. The High Court noted that in situations where the finally assessed income resulted in a loss with no positive income, penalties were not applicable. The court referred to its own previous order in a similar case for a subsequent assessment year, where it was established that no substantial question of law arose from the Tribunal's decision.

Therefore, the High Court dismissed the appeal, concluding that in the absence of any legal question, the Tribunal's decision to cancel the penalty in a case of loss was upheld based on established legal precedents and interpretations.