Commissioner of Income Tax vs Avon Flours Pvt. Ltd.

D.A. Mehta, J.—The appellant-Revenue has proposed the following question:

Whether the Appellate Tribunal is right in facts and in law in cancelling the penalty levied u/s 271(1)(c) of the Act on the ground that the penalty cannot be levied in case of loss ?

Heard Mr. M.R. Bhatt, learned senior standing counsel for the appellant.

According to him, in the light of the decision rendered by the Bombay High Court in the case of CIT v. Chemiequip Ltd. [2004] 265 ITR 265 the impugned order of the Tribunal is erroneous in law and gives rise to a substantial question of law. He has also fairly invited attention to an order made by this Court on September 12, 2005, in Tax Appeal No. 2 of 2005 in the case of Joint (2009) 123 TTJ 778

As can be seen from the impugned order of the Tribunal it has confirmed the order of the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) has relied upon the decision in the case of joint CIT (Asstt.) v. Panchratna Hotels Private Limited, whereby the reference application came to be rejected by the High Court and SLP against the said order also came to be rejected by the Supreme Court. The common thread running through all the decisions is that where finally assessed income was a loss and there was no positive income, no penalty was imposable.

This court has taken cognizance of the aforesaid decision in its order dated September 12, 2005, rendered in Tax Appeal No. 2 of 2005 in the aforesaid case of (2009) 123 TTJ 778 for the subsequent assessment year.

In the aforesaid circumstances, in the absence of any question of law, there is no substantial question of law arising from the impugned order of the Tribunal. The appeal is accordingly dismissed.