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Penalty u/s 271(1)(c)

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This query is : Resolved

Bhadresh (Querist)

10 April 2009 Assessee filed return in which he was having loss in business. A.o.process return & turns into Business Profit.
A.O. Disallow some expenses. After disallowance of expenses, assessee business income is Nil due to brought forward of business loss. A.O. Levied penalty u/s 271(1)(c) for concealment & inaccurate of particulars. A.O. can levy penalty u/s 271(1)(c) even if assessee business taxable income is nil?

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

10 April 2009 If loss is reduced in assessment penalty can be imposed u/s 271(1)(c). Further, retrospective effect has been given through finance act 2008 for section 271(1B). In view of the above,action of A.O will withstand.
However,try in appeal on the strength of the decision in CIT Vs.Ajaib Singh & Co (2002) 253 ITR 630 (Punj & Har) which says,in a nut shell, disallowance of expenses will not per se amount to furnishing inaccurate particulars of income so as to levy penalty u/s 271(1)(c).

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