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TMI Blog1988 (11) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... planation to section 271(1)(c) will not be attracted to the present case ? (b) that the word income occurring in clauses (c) and (iii) of section 271 ( 1 ) refers to a positive income only and not to a loss? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in cancelling the penalty order passed by the Inspecting Assistant Commissioner by holding that no penalty could be levied against the assessee ? " The assessee, which was a firm existing in the assessment year 1970-71, filed its return for the said assessment year on September 30, 1970, declaring loss of Rs. 3,35,830. The Income-tax Officer, vide his order, annexure "A", found that it was a case of concealment and suppression of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed is paid 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 is the sine qua non for imposition of penalty. Clause (iii) deals with cases referred to in clause (c) under sub-section (1) of section 271 of the Act and it clearly provides therein that the penalty or further sum payable by person would be in addition to any tax payable by him. Explanations 3 and 4 annexed to the said provision of law also presuppose taxable income with regard to the assessment year in question. If there is no taxable income or tax assessed for payment during a particular year, the question of evasion and consequently penalty do not arise. As is obvious from annexure "B", the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re could not be any such evasion so as to provide scope for levying any penalty. In the present case, only the loss has been reduced and it cannot be said that the assessee had suppressed any income which would have attracted liability to tax. The question of imposition of penalty, therefore, did not arise. Thus, on the facts and in the circumstances of the case, the Appellate Tribunal has acted rightly in law in holding that the provisions of the Explanation to section 271(1)(c) will not be attracted to the present case. The word "income" occurring in clause (c) and (iii) of section 271(1) of the Act refers to positive income only and that no penalty could be levied against the assessee. For the foregoing reasons, all the questions are an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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