Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment years 1982-83 and 1983-84 - Whether evasion of tax is sine qua non for imposition of penalty under section 271(1 )(c); if there is no taxable income or assessed tax for payment during a particular year, question of evasion and, subsequently, penalty does not arise - Held, yes - Whether Explanation 4 to section 271(1)(c) will apply only where amount of income, in respect of which particulars have been concealed or inaccurate particulars have been furnished, has effect of reducing loss declared in return or converting that loss into income - Held, yes - Whether where total income was assessed at a loss and in enquiry no concealment of income or furnishing of inaccurate particulars was found, no penalty could be imposed under section 271(1)(c) - Held, yes FACTS The assessee-company filed returns of income for the relevant assessment years declaring loss. The Assessing Officer completed the assessment at reduced loss. The appeals filed by the assessee were dismissed by the Commissioner (Appeals) as well as by the Tribunal. Thereafter, the Assessing Officer levied penalty under section 271(1)(c) on the ground that the assessee had concealed the particulars of its income. The Commissioner (Appeals) confirmed the penalty. On second appeal, the Tribunal, however, set aside the penalty holding that penalty imposed is paid in addition to the tax payable and when there was no tax payable, the question of any penalty did not arise. On reference : HELD In sub-clause (iii ) of clause (c) under sub-section (1) of section 271, it is clearly provided that the penalty or further sum payable by a person would be in addition to any tax payable by him and the Explanations 3 and 4 annexed to the said provision of law also pre-suppose taxable income with regard to the assessment year in question. If there is no taxable income or the assessed tax for payment during a particular year, the question of evasion and, subsequently, penalty does not arise. So far as the Explanation 4 is concerned, the same will apply only where the amount of income, in respect of which particulars have been…

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