Hon’ble Dinesh Kumar Singh, J.—This Income Tax Appeal has been filed by the appellant-assessee under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) against the order dated 30.9.2010 passed by the Income Tax Appellate Tribunal, New Delhi, Bench ‘F’ (hereinafter referred to as ‘the Tribunal’) in Income Tax Appeal No. 1994/DL/2010 which was filed by the assessee against the order dated 26.3.2010 passed by the CIT(A). Assessment year involved in the present appeal is 2004-05.

2.The following questions of law have been framed in the memo of appeal for decision by this Court:

(i) Whether on the facts and circumstances of the case the ITAT was right in confirming the penalty under Section 271(i)(c) of the Act.

(ii) Whether on the facts and circumstances of the case the I.T.A.T. was correct to confirmed the penalty under Section 271(1)(c) of the Act on the ground that the appellant is wrongly claimed loss amounting to Rs. 84,78,052/- by debiting it to P & L Account on account of loss on sale of assets whereas the same was capital loss and not business loss.

(iii) Whether the ITAT rightly applied the decision of CIT v. Zoom Communication (P) Ltd., 327 ITR 510 (Del.), ignoring the decision of CIT v. Siddharth Enterprises, 322 ITR 80.

(iv) Whether the I.T.A.T. Rightly confirmed the penalty under Section 271(1)(c) of the Act when the Assessee filed return of income declaring loss and the assessment was made at Nil income by the Assessing Authority by order dated 27.3.2007 under Section 154 of the Act.

3. The assessee filed return of its income on 29.10.2004 declaring a loss of Rs. 1,04,25,550/-. Return was processed under Section 143(1) of the Act and the case was taken up in scrutiny. The Assessing Officer (hereinafter referred to as ‘the AO’) noted that the assessee had inter alia debited an amount of Rs. 84,78,057/- in Profit and Loss account as business loss incurred on account of sale of assets. The AO finalised the assessment order under Section 143(3) of the Act on 15.12.2006 and treated this loss as capital loss and held that the same could not have been debited in Profit and Loss account as business loss. The AO added back this amount and calculated total assessed income at Rs. 27,29,187/-. The AO was also of the view that the assessee had intentionally entered the capital loss in the profit and loss account in order to decrease profits, hence, penalty proceedings under Section 271(1)(c) of the Act were to be initiated and issued the penalty notice to the assessee.

4. Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee.

5. The show-cause notice (hereinafter referred to as ‘the SCN’) under Section 271(1)(c) of the Act was issued on 19.3.2009 to which the appellant-assessee filed its reply on 23.3.2009. In reply to the SCN, the assessee said that despite the additions, no tax was payable by the assessee as per the AO’s order under Section 154 of the Act dated 27.3.2007 in which the AO had allowed the entire amount as deduction under Section 80-IB(9) of the Act and, therefore, income was assessed as Nil in the order passed under Section 154 of the Act by the AO. If there was no income, there could not be any penalty.

6. The AO after considering reply to the SCN filed by the assessee passed the order of penalty under Section 271(1)(c) of the Act on 30.3.2009. The AO rejected the contention of the assessee and held that the penalty under Section 271(1)(c) of the Act could be levied even if the return income was a loss. The AO was of the view that the assessee had intention to conceal particulars of its income and, therefore, penalty under Section 271(1)(c) of the Act was imposable. The AO levied 100% penalty of tax amounting to Rs. 37,40,165/-.

7. Aggrieved by the aforesaid penalty order, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal and upheld the order passed by the AO.

8. The assessee fi