IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ASN NOTICE OF MOTION NO.3397 OF 2005 IN INCOME TAX APPEAL LODG. NO. 1463 OF 2005 The Commissioner of Income Tax. ..Appellant. Vs. M/s. Arun Mantex Pvt. Ltd. ..Respondents. Mr.S.M. Shah with P.S.Sahadevan for the Appellant. CORAM : F.I. REBELLO & R.S. MOHITE, JJ. DATED : 24th March,2008. PC : 1. There is a delay of 119 days. Considering the cause shown, delay condoned, Office to register the appeal. (R.S. MOHITE, J.) (F.I. REBELLO, J.) IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ASN INCOME TAX APPEAL LODG. NO. 1463 OF 2005 The Commissioner of Income Tax. ..Appellant. Vs. M/s. Arun Mantex Pvt. Ltd. ..Respondents. Mr.S.M. Shah with P.S.Sahadevan for the Appellant. CORAM : F.I. REBELLO & R.S. MOHITE, JJ. DATED : 24th March,2008. PC : 1. From the order of CIT, it is apparent that the Assessing Officer has concluded that there could not be any addition because purchases from the parties mentioned in the order are bogus, same treatment should be given to the labour charges received and as such, amount of Rs. 91,60,391/- to be reduced from both the sides of the profit and loss account resulting Nil effect on the income disclosed by the appellants therein. It is further recorded that A.O. initiated the penalty proceedings only on the ground that the appellants have filed inaccurate particulars of their income. The Commissioner (Appeals) relied on the Judgment of the Orissa High Court in the case of CIT Vs. Indian Metals & Ferro Alloys Ltd. 117 CTR Orissa 378. On the facts therein as set out, came to the conclusion and held that the penalty proceedings initiated by the A.O. are without causing any proper enquiry and hence, not justified. 2. Next addressed himself to the question whether the penalty can be imposed even in the absence of positive income and relied on the Judgment in the case of Prithipal Singh and Co. of the Punjab & Haryana High Court and held that the word "income" in clause (c) and (iii) of Section 271(1)(c) of the Income Tax Act,1961 refers to positive income only. After considering the various contentions held that the tax could not be levied. 3. In appeal, the Tribunal in so far as the sum of Rs.91,60,391/- concurred with the finding recorded by the Commissioner (Appeals) that the penalty under Section 271(1) is not leviable. . In so far as addition of Rs.7,25,000/- is concerned, the issue of penalty thereof has been referred back to the A.O. for re-enquiry and thereafter passing appropriate order. 4. The learned Tribunal held that the judgment of Prithipal Singh 249 ITR 670 would not be applicable in so far as present case is concerned. However, as there was no addition, the penalty was not leviable. In so far as other part of the judgment, the matter was remanded back to the A.O. and accordingly, the appeal was dismissed. 5. In our opinion, considering these findings the question of law would not arise in so far as penalty is concerned and consequently, the appeal dismissed. (R.S. MOHITE, J.) (F.I.REBELLO, J.)