2006 (2) TMI 83

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....ealed any income or furnished inaccurate particulars of income under the meaning of section 271(1)(c) of the Income-tax Act? (2) Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in cancelling the penalty under section 271(1)(c), on the ground that the assessee's income computed by the assessing officer is a net loss?" The facts which led to the rise of the above appeal by the Revenue are as under. The assessee publishes and prints five tamil magazines, apart from doing job works, in the name of M/s. Parvathy Publication and M/s. Parvathy Art Printers. The assessee filed the return admitting a loss of Rs. 9,45,242 for the assessment year 1992-93. On a perusal of the account books....

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....89; (ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure; (iii) in the cases referred to in clause (c), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or the furnishing of inaccurate particulars of such income." The words "in addition to tax, if any, payable by him" employed in clauses (ii) and (iii) above and the words "amount of tax sought to be evaded by reason of such concealment of particulars of his income" employed in clause (iii) of section 271(1)(c) of the Act are the dec....

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....ion of tax is the sine qua non for imposition of penalty. If there is no taxable income or tax assessed for payment during a particular year, the question of evasion and consequently, penalty does not arise. The penal provisions of section 271(1)(c), therefore, are attracted only in the case of an assessee having positive income and not loss, as the question of concealment of income to avoid payment of tax would arise only in the former case. Penalty is a deterrent measure to prevent evasion of tax and when there was no tax payable, there could not be any such evasion so as to provide a scope for levying any penalty, vide CIT v. Prithipal Singh and Co. [1990] 183 ITR 69 (P&H). The view taken by the Punjab and Haryana High Court in CIT v.....