Penalty for concealment cannot stand when tax is assessed on book profit under MAT and normal computation causes no tax effect.

Penalty for concealment was held unsustainable where the assessee's income was finally assessed on book profit under section 115JB, so the normal computation did not determine tax liability. As tax was payable under the MAT regime and the alleged concealment had no effect on the tax so computed, the principle of tax sought to be evaded was not satisfied. The penalty under section 271(1)(c) was therefore deleted.

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Issues: Whether penalty under section 271(1)(c) of the Income-tax Act, 1961 could be sustained where the assessee's income was assessed under section 115JB of the Income-tax Act, 1961 on book profit basis and no tax liability arose under the normal computation.

Analysis: The assessment was ultimately made on the basis of book profit under section 115JB, which operated as the deemed total income. The Tribunal noted that the normal computation did not form the basis of taxation and that the alleged concealment had no effect on the tax payable under the MAT regime. Relying on the principle that penalty under section 271(1)(c) is attracted only where there is tax sought to be evaded on the basis of the computation actually adopted, the Tribunal held that the concealment, if any, became irrelevant once tax was determined under section 115JB.

Conclusion: The penalty under section 271(1)(c) was not sustainable and was directed to be deleted.

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