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Issues involved: Appeal against cancellation of penalty u/s 271(1)(c) of the IT Act.
Summary: The Department appealed against the cancellation of a penalty of Rs. 35,51,000 imposed on the assessee u/s 271(1)(c) of the IT Act. The assessee, a company, initially declared a loss for the assessment year, which was revised to a higher loss. The assessment was completed under s. 143(3) of the Act, resulting in a nil income after adjusting losses brought forward. The AO also computed the book profit under s. 115JA, accepting the assessee's computation. The penalty proceedings u/s 271(1)(c) were initiated separately based on the revised computation of income. The AO imposed the penalty despite the assessee's submission that no tax was payable under the normal provisions of the Act, hence no concealment of income occurred. The CIT(A) cancelled the penalty, noting that the income under the normal provisions was nil after adjusting losses. The Revenue appealed, arguing that the penalty should be upheld. However, the Tribunal found that no concealment occurred regarding the declaration of book profits under s. 115JA. Referring to a recent judgment, it held that no penalty is leviable if the assessed income is nil due to adjustments like brought forward losses. The Tribunal further analyzed specific claims made by the assessee, such as bad debts and withdrawn expenses, concluding that there was no deliberate concealment or furnishing of inaccurate particulars. Citing legal precedents, it emphasized that the revised computation of income was filed in good faith to correct inadvertent errors. Ultimately, the Tribunal upheld the CIT(A)'s decision to cancel the penalty, dismissing the Revenue's appeal. In conclusion, the Tribunal found no grounds for sustaining the penalty under s. 271(1)(c) and upheld the cancellation by the CIT(A), dismissing the Revenue's appeal.
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