Penalty under section 271(1)(c) fails where brought forward losses eliminate tax payable after set-off.

Penalty under section 271(1)(c) was considered in the context of set-off of brought forward losses. The applicable principle was that concealment or inaccurate particulars must result in tax sought to be evaded, and penalty cannot be computed on an income figure before mandatory loss adjustment. After giving effect to the brought forward losses, the returned and assessed income became nil, leaving no tax payable for the relevant year. On that basis, the penalty was treated as unsustainable and the cancellation by the first appellate authority was affirmed.

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Issues: Whether penalty under section 271(1)(c) was leviable when brought forward losses were set off and no tax was payable on the returned or assessed income.

Analysis: The penalty provision was examined in the context of the Supreme Court ruling that penalty under section 271(1)(c) is payable only where concealment results in tax sought to be evaded, and that the main condition for levy is the existence of positive income resulting in tax. The Court held that the computation of total income must be made after giving effect to set-off of brought forward losses under the Act, and that penalty cannot be worked out on a figure arrived at before such adjustment. Since the returned income as well as the assessed income became nil after set-off of brought forward losses, no tax was payable for the relevant year.

Conclusion: The penalty was not sustainable and its cancellation by the first appellate authority was upheld.

Final Conclusion: The Revenue's challenge failed because the case did not attract penalty under section 271(1)(c) in the absence of tax payable after set-off of brought forward losses.

Ratio Decidendi: Penalty under section 271(1)(c) is not leviable unless the concealment or inaccurate particulars produce tax sought to be evaded, and where set-off of brought forward losses leaves no tax payable, the statutory precondition for penalty is absent.

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