2008 (8) TMI 5 - SC - Income Tax

Whether the penalty under Section 271 (1) (c) of the Income Tax Act, 1961 (in short the `Act') can be levied if the returned income is a loss – held that:-Law is well settled that the applicable provision would be the law as it existed on the date of the filing of the return. It is of relevance to note that when any loss is returned in any return it need not necessarily be the loss of the concerned previous year. It may also include carried forward loss which is required to be set up against future income under Section 72 of the Act. Therefore, the applicable law on the date of filing of the return cannot be confined only to the losses of the previous accounting years

Explanation 4 to Section 271(1)(c) is clarificatory and not substantive – though penalty can be - Decision of division bench of apex court Virtual Soft Systems Ltd. V. CIT overruled. - Decided in favor of revenue.