CIT AND ORS. Vs. TRICONE CEMENTS (P) LTD.

JUDGEMENT

(1.) THIS appeal under section 260A of the Income Tax Act has been filed by the appellant against the judgment and order of the Tribunal dt. 27 -5 -2005 in ITA No. 1433/Del/2004. The appeal has been admitted on the following substantial question of law Nos. 2 and 3 :

(2.) THE brief facts giving rise to this appeal are : the assessee filed a return for the assessment year 1995 -96 showing a net loss of Rs. 61,85,614. While completing the assessment, the assessing officer also initiated penalty proceedings. Penalty of Rs. 40,00,000 was imposed under section 271(1)(c). The assessee filed an appeal. In the appeal, the assessee contended that there being no positive income, the imposition of penalty under section 271(1)(c) was not justified. Reliance was placed on the judgment of Punjab & Haryana High Court in CIT v. Prithipal Singh & Co. : (1990) 85 CTR (P&H) 26 : (1990) 183 ITR 69 (P&H), which decision has been affirmed by the Apex Court in CIT v. Prithipal Singh & Co. : (2001) 166 CTR (SC) 187 : (2001) 249 ITR 670 (SC). The Commissioner (Appeals) allowed the appeal. The Commissioner (Appeal) held that penalty was not imposable in view of the judgment of Punjab and Haryana High Court in : (1990) 183 ITR 69 (supra) as affirmed by the Apex Court in CIT v. Prithipal Singh & Co. (supra). The Department filed an appeal before the Tribunal which appeal has been dismissed relying on the judgment of the Apex Court in CIT v. Prithipal Singh & Co. (supra).

(3.) THE Apex Court in CIT v. Gold Coin Health Food (P) Ltd. (supra) had occasion to consider import of Explanation 4 to section 271(1)(c) and also the judgment of the Apex Court in CIT v. Prithipal Singh & Co. (supra). It is useful to quote the following observations of the Apex Court in paras 7, 8, 9, 10, 11 and 12 :