Assessee wins appeal, penalty under Income Tax Act section 271(1)(c) deleted.

The Tribunal ruled in favor of the assessee, deleting the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the legal principle that such penalties do not survive when the tax liability is ultimately computed under section 115JB of the Act.

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Issues:
1. Challenge to penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2006-07.
2. Legal issue of whether penalty under section 271(1)(c) would survive when tax liability is computed on book profit under section 115JB of the Act.

Analysis:

Issue 1: Challenge to Penalty Imposed
The appeal was filed by the assessee against the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961 for the assessment year 2006-07. The Assessing Officer made certain disallowances/additions resulting in a positive income under the normal provisions of the Act. The tax liability computed under the normal provisions exceeded that under section 115JB, leading to the imposition of the penalty. The learned Commissioner (Appeals) confirmed the penalty, which was challenged by the assessee.

Issue 2: Survival of Penalty under Section 271(1)(c)
The crux of the legal issue was whether the penalty under section 271(1)(c) would survive when the tax liability was ultimately computed on the book profit under section 115JB of the Act. The assessee argued that once the tax liability was determined under section 115JB, the penalty based on disallowances under the normal provisions should not stand. The argument was supported by a decision in Mehta Sulfites India Ltd. v/s ACIT, emphasizing that such penalties would not survive in such cases.

Judgment and Decision
After considering the submissions and the factual matrix, the Tribunal noted that the tax liability was ultimately computed under section 115JB of the Act. Citing the decision of the Hon'ble Delhi High Court in CIT v/s Nalwa Sons Investment Ltd., the Tribunal held that penalties under section 271(1)(c) based on additions/disallowances under normal provisions would not survive when income is computed under section 115JB. This principle was further supported by the Co-ordinate Bench decision in Mehta Sulfites India Ltd. Consequently, the Tribunal deleted the penalty imposed under section 271(1)(c) of the Act, allowing the appeal in favor of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, deleting the penalty imposed under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the legal principle that such penalties do not survive when the tax liability is ultimately computed under section 115JB of the Act.

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