Concealment Penalty Cannot be Imposed When Income Assessed Under MAT Provisions: ITAT

The Income Tax Appellate Tribunal (ITAT), Lucknow, has deleted a penalty imposed under Section 271(1)(c) of the Income Tax Act, holding that no tax evasion occurs when an assessment is made under the Minimum Alternate Tax (MAT) provisions.

The company, Agmotex Fabrics Ltd, had filed its Income Tax Return for AY 2005-06, declaring nil income. During scrutiny, the assessment was framed at nil on the basis that the income under section 115JB was more than the tax on the income worked out under the normal provisions of the Income Tax Act. Even after this, the Assessing Officer initiated penalty proceedings under Section 271(1)(c) and imposed a penalty of Rs 1,26,065, which was also upheld by CIT(A).

Before the Tribunal, the assessee argued that the income was determined under section 115JB and there was no loss to the income tax department.

The Tribunal agreed with this argument. It relied on the judgement of the Delhi High Court, where it was clarified that the penalty under Section 271(1)(c) for concealment of income cannot be levied if the income is assessed under MAT provisions and not under normal computation.

The Tribunal upheld these earlier rulings and directed the AO to delete the penalty imposed under Section 271(1)(c).