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2004 (12) TMI 284 - AT - Income TaxLevy Of Penalty u/s 271(1)(c) - Whether penalty can be levied u/s. 271(1)(c) in cases where the assessed income is loss having regard to the amendment made by the Taxation Laws (Amendment) Act 1975 and by the Finance Act 2002? - HELD THAT - From the Expln. 4(a) of s. 271(1)(c) it is clear that now the legislature clearly provides for the levy of penalty where the loss declared in the return of income is reduced or converted into income. Therefore in our opinion before the amendment by Finance Act 2002 it cannot be held that the penalty u/s. 271(1)(c) can be levied where the assessed income is loss. In the case of CIT vs. Omkar Sharan Sons 1992 (3) TMI 1 - SUPREME COURT the Hon ble apex Court has held that the penalty for concealment would be governed by the law as it stood at the time when the original return was filed. Similar view was expressed by Their Lordships of Hon ble apex Court in the case of Brij Mohan vs. CIT 1979 (8) TMI 2 - SUPREME COURT . It is undisputed that the return in the case of all the assessee s before us were filed much prior to the amendment by the Finance Act 2002. As per the law prevailing at that time penalty u/s 271(1)(c) was not to be levied if the assessed income is loss. Therefore the subsequent amendment cannot fasten the liability of penalty upon the assessees unless the legislature expressly provided for the same. As the Finance Act 2002 made the amendment in s. 271(1)(c) w.e.f. 1st April 2003 it cannot be said that the amendment was clarificatory and therefore retrospective in operation. We have already noticed that under s. 143(1A) as it stood prior to the amendment by Finance Act 1993 there was provision for levy of additional tax for any variation in the returned income. Courts have held that additional tax cannot be levied when the assessed income is loss. For taking such view the Hon ble Allahabad High Court in the case of Indo Gulf Fertiliser and Chemical Corporation Ltd. 1992 (2) TMI 78 - ALLAHABAD HIGH COURT has noticed the provision of s. 271(1)(c) and has stated that the provisions of s. 143(1A) are similar to s. 271(1)(c) and thereafter came to the conclusion that levy of additional tax was not permissible where the assessed income is loss. The legislature has amended s. 143(1A) by Finance Act 1993 with retrospective effect from 1st April 1989. However when s. 271(1)(c) is amended by Finance Act 2002 it has been made effective from 1st April 2003 and not retrospectively. Therefore the only inference can be drawn that the legislature did not intent to effect the amendment in s. 271(1)(c) retrospectively. Thus having regard to the amendment made by Taxation Laws (Amendment) Act 1975 and by Finance Act 2002 we hold that for the assessment years under appeal before us penalty cannot be levied u/s 271(1)(c) in the cases where the assessed income is loss. In all the cases under appeal before us the assessed income is loss and therefore the levy of penalty u/s 271(1)(c) is not justified and the same is cancelled. Accordingly the Revenue s appeals are dismissed while the assessee s appeals in the case are allowed. In the result the appeals are disposed of pro tanto.
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