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TMI Blog2006 (2) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment did not show any taxable income, but net loss - we do not find any error or illegality in the order of the Tribunal in deleting the penalty taking into account the income of the assessee is a net loss - - - - - Dated:- 27-2-2006 - Judge(s) : P. D. DINAKARAN., P. P. S. JANARTHANA RAJA. JUDGMENT The judgment of the court was delivered by P.D. Dinakaran J.-The above tax case appeal is directed against the order of the Income-tax Appellate Tribunal dated August 25, 2005, made in I.T.A. No.1678/Mds/1999, raising the following substantial questions of law. "1. Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in deleting the penalty, even though the assessee was con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs and penalty proceedings are separate and because of the quantum, penalty cannot be levied automatically. Hence, the present appeal by the Revenue. It would be appropriate to refer section 271(1)(c) of the Act in this regard, which reads as under: "Failure to furnish returns, comply with notices, concealment of income etc.-(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person- ... (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty,- (i) Omitted by the Direct Tax Laws (Amendment) Act, 1989, with effect from April 1, 1989; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Therefore, the conclusion is irresistible that when the assessee is not liable to pay any tax, no penalty can be levied on the assessee, vide Addl. CIT v. Murugan Timber Depot [1978] 113 ITR 99 (Mad). It is trite law that the loss cannot be taken into account in computing penalty. Similarly, the amount representing unexplained credit cannot be treated as concealed income for levying penalty, vide CIT v. C.R. Niranjan [1991] 187 ITR 280 (Mad). The word "income" occurring in clauses (c) and (iii) of section 271(1) of the Act refers to positive income only and not a loss. Penalty could be imposed only in addition to the tax payable. When there is no tax payable, the question of any penalty does not arise. In fact, evasion of tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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