Penalty for negative income adjustments applies under tax law, but concealment must be examined separately on remand.

Penalty under section 271(1)(c) of the Income-tax Act can be attracted even where adjustment of unabsorbed depreciation results in loss or negative income, following the larger Bench ruling in CIT v. Gold Coin Health Food P. Ltd.; on that issue, the position was stated in favour of the Revenue. The separate question whether there was concealment justifying penalty had not been examined by the Tribunal or the High Court in the earlier round, so that issue was remitted to the Tribunal for fresh decision on merits. The matter therefore remained open on the concealment aspect.

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Issues: (i) Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on account of adjustment of unabsorbed depreciation resulting in negative income or loss. (ii) Whether the concealment aspect attracting penalty under section 271(1)(c) required reconsideration by the Tribunal.

Issue (i): Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable on account of adjustment of unabsorbed depreciation resulting in negative income or loss.

Analysis: The first issue was treated as covered by the decision of the larger Bench in CIT v. Gold Coin Health Food P. Ltd., which governed the levy of penalty where the computation resulted in loss or negative income.

Conclusion: The issue was answered in favour of the Revenue.

Issue (ii): Whether the concealment aspect attracting penalty under section 271(1)(c) required reconsideration by the Tribunal.

Analysis: The concealment question had not been examined by the High Court or by the Tribunal in the earlier round, and therefore required remand for decision on merits.

Conclusion: The issue was remitted to the Tribunal for fresh consideration.

Final Conclusion: The appeals were allowed to the extent of the first issue, while the concealment question was sent back for adjudication, leaving the matter unresolved on that aspect.

Ratio Decidendi: Penalty under section 271(1)(c) can be attracted even where the computation results in loss or negative income, but an unexamined concealment issue must be decided by the fact-finding authority in the first instance.

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