COMMISSIONER OF INCOME-TAX VISAKHAPATNAM Vs. BALARAMA KRISHNA ENGINEERING CONTRACTORS CORPORATION VISAKHAPATNAM

JUDGEMENT

(1.) The Commissioner of Income Tax, Visakhapatnam, got the following question referred to this Court under Section 256(1) of the Income Tax Act, 1961 (the Act).

(2.) Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that penalty under Sec.271(1)(c) of the I.T.Act cannot be levied in a case where the assessed income is a loss.

(3.) At the outset it is necessary to briefly mention the facts leading to the reference. The assesse firm is a civil contractor. They filed the return of income for assessment year 1990-1991 showing loss of Rs.28,27,249/-. The Income Tax Officer completed assessment under Section 144 of the Act. While doing so, he added Rs.19,15,002/- and reduced the addition of Rs.10,00,000/- to Rs.7,45,253/-, and determined the tax payable at Rs.9,03,375/-. Penalty proceedings were also initiated separately under Section 271(1)(c) of the Act and an amount of Rs.14,34,294/- was imposed as penalty by order dated 16.03.1993. The Commissioner of Income Tax (Appeals) confirmed the penalty vide order dated 31.12.1993. The Income Tax Appellate Tribunal (the Tribunal), however, allowed the appeal against penalty order taking a view that levy of penalty for concealment in case where the assessed income is loss is not permissible under law.