2009 (8) TMI 87 - HC - Income Tax

Deletion of penalty loss return - The assessee was alleged to have concealed income while declaring net loss. The Assessing Officer after making assessment initiated proceeding for levy of penalty and passed an order of penalty. Levy of penalty was deleted by the CIT(A) which view has been upheld by the Tribunal held that - even if there is loss penalty could be levied for concealment of income under Section 271(1)(c) of the Act. This legal position has not been disputed by learned counsel for the assessee - the view taken by the Tribunal has to be reversed. The substantial question of law has to be answered in favour of the revenue and against the assessee penalty to be levied

Summary

The High Court of Punjab and Haryana heard an appeal by the revenue under Section 260A of the Income Tax Act, 1961 against an order by the Income Tax Appellate Tribunal for the assessment year 1995-96. The appeal questioned the deletion of a penalty imposed on the assessee for allegedly concealing income while declaring a net loss. The Tribunal had based its decision on a judgment in the case of CIT v. Prithipal Singh & Co. 183 ITR 69, which was later reversed by the Supreme Court in CIT vs. Gold Coin Health Food P. Ltd. [2008] 304 ITR 308. The Supreme Court ruled that even in the case of a loss, a penalty could be levied for concealing income under Section 271(1)(c) of the Act. Consequently, the High Court allowed the appeal, set aside the Tribunal's order, and reinstated the Assessing Officer's decision to impose the penalty. Additionally, the Court directed the Central Board of Direct Taxes (CBDT) to consider the issue of waiver based on the assessee's financial status within one month. The appeal was disposed of accordingly.