Penalty under section 271(1)(c) not leviable where normal tax is lower than MAT, with prospective amendment inapplicable.

Penalty under section 271(1)(c) was held not leviable where, for a pre-01-04-2016 assessment year, the tax payable under the normal provisions was lower than the tax payable under section 115JB. CBDT Circular No. 25/2015 clarified that in such cases penalty is not attracted on additions or disallowances made under the normal provisions, and the substituted Explanation 4 to section 271(1) applied only prospectively from 01-04-2016. On that basis, deletion of the penalty was upheld.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 was leviable when the tax payable under the normal provisions was less than the tax payable under section 115JB of the Income-tax Act, 1961, in view of CBDT Circular No. 25/2015 dated 31-12-2015 and the prospective substitution of Explanation 4 to section 271(1).

Analysis: The assessment year involved was prior to 01-04-2016. The circular clarified that, in cases where the tax payable on total income computed under the normal provisions is less than the tax payable on book profits under section 115JB, penalty under section 271(1)(c) is not attracted with reference to additions or disallowances made under the normal provisions. The substituted Explanation 4 to section 271(1) was applicable only prospectively from 01-04-2016, and therefore did not govern the present case.

Conclusion: Penalty under section 271(1)(c) was not leviable, and the deletion of penalty was upheld.

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