2017 (4) TMI 670 - SCH - Income Tax

Penalty under Section 271(1)(c) - the assessed income is loss, as a result of reduction at the time of final asssessment as against the amount of loss declared in the Income Tax Return - Held that - This Court in the case of Commissioner of Income Tax I, Ahmedabad versus Gold Coin Health Food Private Limited 2008 (8) TMI 5 - SUPREME COURT has held that penalty can be levied even if no tax is payable on the total income assessed and the court has analysed the nature of the amendment to come to a conclusion whether it is in reality a clarificatory or declaratory provision. In view of the law laid down in the aforesaid decision, the Tribunal was not right in cancellation of the penalty under Section 271 (1) (c) of the Income Tax Act, 1961 merely on the ground that no penalty can be levied if returned income and the assessed income is a loss under Section 271 (1) (c) of the Income Tax Act, 1961 in as much as this amendment has been held to be retrospective in operation. In view of the above, the appeal is allowed and the impugned judgment passed by the High Court as also the order of the Tribunal are set aside and the matter is remitted back to the Tribunal to decide on the quantum of the penalty after giving opportunity of hearing to the respondent herein. - Decided against assessee.

Summary

The Supreme Court held that penalty under Section 271(1)(c) of the Income Tax Act can be levied even if the assessed income is a loss. The Tribunal was wrong in canceling the penalty solely based on this ground. The Court referred to a previous decision and concluded that the penalty can be imposed retrospectively. The appeal was allowed, and the case was remitted back to the Tribunal for deciding the penalty amount after giving the respondent a hearing opportunity.