In Brief
This appeal concerns whether a penalty can be imposed under section 271(1)(c) of the Income-tax Act, 1961 when the assessed income is nil. The High Court of Gujarat held that no penalty is leviable in such circumstances. The Supreme Court upheld this judgment, relying on its earlier decision in Virtual Soft Systems Ltd. v. CIT. The appeal by the Joint Commissioner of Income-Tax against the High Court's order was dismissed, confirming that penalties under section 271(1)(c) cannot be levied when both the income disclosed and assessed are nil.
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