LexCOMMNR. OF INCOME TAX-I, AHMEDABAD versus GOLD COIN HEALTH FOOD PVT. LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2008] 12 S. C.R. 179
COMMNR. OF INCOME TAX-I, AHMEDABAD
A
v.
GOLD COIN HEALTH FOOD PVT. LTD.
(Civil Appeal No. 5065 of 2008)
AUGUST 18, 2008
[DR. ARIJIT PASAYAT, P. SATHASIVAM AND AFTAB
. ALAM, JJ.]
B
Income Tax Act, 1961; s. 271(1)(c) with amendment in
Explanation 4 to s.271(1) (c) (iii) introduced by Finance Act, c
2002:
Returned income - Loss/profit - Levy of penalty - Held:
Term 'income' also includes losses - Explanation 4 to s. 271
(1 )(c) (iii) is clarificatory in nature and not substantive and has
to be construed accordingly - Recommendation of Wanchoo
D
Committee and relevant circular makes the position clear that
penalty in terms of amendment leviable where addition of con-
cealed income reduces the returned loss - In the facts and
circumstances of the case, the amendment could be given :h
retrospective effect - Interpretation of Statutes.
E
Amendment in the Statute - Effe9t of, effective date -
Discussed.
The question which arose for determination in these
appeals was about the correctness of the impugned judg-
F
ment of the Division Bench of the High Court about the
applicability of the amendment as introduced by Finance
Act, 2002 in Explanation 4 to s.271 (1 )(c)(iii) of the Income
Tax Act in the context of levy of penalty on the returned
income with effect from retrospective effect.
G
Revenue contended that the purpose behind Sec-
tion 271(1)(c) of the Income Tax Act is to penalize the as-
sessee for concealing particulars of the income; and/or · ··
furnishing inaccurate particulars of such income. There-
179
H
186
SUPREME COURT REPORTS
[2008] 12 S.C.R.
A fore, whether income returned was a profit or loss was
really of no consequence; that the word 'any' in S.271
(1)(c) of the Act made the position clear that the penalty
was in addition to any tax which may be paid by the as-
sessee. Therefore, even if no tax was payable, the pen-
8
alty was leviable; that even prior to the amendment of the
provision u/s 271 (c) of the Act, it could not be read to
mean that if no tax was payable by the assessee because
~
of filing a return disclosing loss, the assessee is not Ii-
able to pay'.,penalty even if the assessee concealed and/
c or furnished inaccurate particulars; that because some
High Courts took the contradictory view, the Legislature.
clarified the position by changing the expression "any'
by "if any"; and ,that it was not a substantive amendment
which created a pe.nalty for the first time but it was
D c}arificatory in nature and would apply to all assessme·nts
e'ven prior to assessment year 2003-04:
Assessee submitted that there is nothing in Section
...
271(1) (c) of the Act as amended by Finance Act to sug-
--k
gest that the amendment is retrospective; an·d that the
E amendment and the Explanation 4(a) carried out, enlarged
the scope for levyin<g penalty under Section 271 (1) (c) of
the Act and, therefore, does not operate retrospectively.
.
,.
Disposing of the appeals, the Court
F
HELD: 1.1 This Court in the case of Commissioner of
Income Tax (Central), Delhi v. Harprasad & Co. P Ltd., held
,k
that the expression 'income' should be understood to in-
elude losses. The expression 'profits and gains' refers to
positive income whereas losses represent negative profit
G or in other words minus income. Reference to the order
by this Court dismissing the revenue's Civil Appeal
No.7961 of 1996 in Commissioner of Income Tax v. Prithipal
>--
Singh and Co. is not very important because that was in
relation to the assessment year 1970-71 when Explana-
H tion 4 to Section 271 (1) ((c) was not in existence. The view
•
COMMNR. OF INCOME TAX-I, AHMEDABAD v. GOLD 181
COIN HEALTH FOOD PVT. LTD.
;
~
'>{
of this Court in. Harprasad's case leads to the irresistible A
conclusion that income also includes losses. Explana-
tion 4 (a) "s it stood during the period 1.4.1976 to 1.4.2003
has to be considered in the background. What the Finance
Act, 2002 intended was to make the position explicit which
otherwise was imp.lied. (Paras - 7 & 8) [187,G-H; 188,A-C]
B
Commissioner of Income Tax (Central), Delhi v .
..
Harprasad & Co. P. Ltd. (1975) 99 ITR 118 - relied on.
-,..
Commissioner of Income Tax v. Prithipal Singh & Co.
(1990) 183 ITR 69 - distinguished.
c
1.2 A combined reading of the Wanchoo Committee's
recommendations and Circular No.204 dated 24.01.1976
issued by the Revenue makes the position clear that Ex-
planation 4(a) to SeExcerpt shown. Read the full judgment & AI analysis in Lexace.