2013 (12) TMI 364 - HC - Income Tax

Concealment of income - Held that - Following Commissioner of Income Tax Vs. Gold Coin Health Food P. Ltd. 2008 (8) TMI 5 - SUPREME COURT - Explanation 4 to Section 271(1)(c) is clarificatory and not substantive - The penalty is leviable even in case of return of loss - The issue was restored for fresh adjudication.

Summary

Issues:
- Appeal against penalty imposed under Section 271(1)(c) of the Income Tax Act for alleged concealment of income
- Interpretation of whether penalty can be imposed in case of return of loss
- Application of precedents from Punjab & Haryana High Court and Apex Court
- Consideration of clarificatory nature of Explanation 4 to Section 271(1)(c)

Analysis:
The case involved an appeal against a penalty imposed under Section 271(1)(c) of the Income Tax Act for alleged concealment of income. The assessee appealed against the penalty imposed by the Assessing Officer, which was confirmed by the Income Tax Appellate Tribunal. The Tribunal, relying on a judgment of Punjab & Haryana High Court, held that no penalty was leviable in the case of a return of loss. The Tribunal did not address other issues raised in the appeal. The department contended that the Tribunal's view was erroneous, citing a later judgment of the Apex Court in Commissioner of Income Tax Vs. Gold Coin Health Food P. Ltd., which clarified that penalty can be levied even in cases of return of loss.

The Tribunal's decision was based on the premise that in a return of loss, penalty is not leviable. The Tribunal observed that the assessee had suffered a loss, and therefore, penalty under Section 271(1)(c) was not applicable. However, the Apex Court's judgment in Commissioner of Income Tax Vs. Gold Coin Health Food P. Ltd. clarified that Explanation 4 to Section 271(1)(c) is clarificatory and not substantive, making penalty applicable even in cases of return of loss. Consequently, the Tribunal's view was deemed unsustainable, and the matter was remitted back to the Tribunal for fresh consideration on all points.

In conclusion, the High Court allowed the appeal, setting aside the Tribunal's judgment, and remitted the matter back to the Income Tax Appellate Tribunal for a fresh hearing in accordance with the law. The decision highlighted the importance of considering the clarificatory nature of the relevant legal provisions and the applicability of precedents set by higher courts in determining the imposition of penalties under the Income Tax Act.