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December 2009

Penalty — Concealment of income — Penalty can be levied u/s.271(1)(c) even in a case where positive income is reduced to nil after set off of carried forward losses of earlier years.

By Kishor Karia, Chartered Accountant
Atul Jasani, Advocate
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  1. Penalty — Concealment of
    income — Penalty can be levied u/s.271(1)(c) even in a case where positive
    income is reduced to nil after set off of carried forward losses of earlier
    years.

[CIT v. R.M.P. Plasto P.
Ltd., (2009) 313 ITR 397 (SC)]

The question that came up for
consideration before the High Court was whether the Appellate Tribunal was
right in law and on facts in cancelling the penalty levied u/s.271(1)(c) of
the Act on the ground that there was loss assessed in the year under
consideration, without appreciating the fact that there was positive income
which was reduced to nil only after allowing set off of carried forward losses
of earlier years. The High Court dismissed the appeal following its decision
in the case of CIT v. Avon Flours P. Ltd., (2009) 313 ITR 400 (Guj.).

On appeal, the Supreme Court
allowed the appeal in view of the judgment of the larger Bench in CIT v.
Gold Coin Health Food P. Ltd., (2008) 304 ITR 308 (SC).

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