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TMI Blog2010 (5) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal preferred under Section 260 (A) of the Income Tax Act, 1961, (hereinafter referred to as 'the Act') in a most casual manner. The order is not only cryptic but does not even remotely deal with the arguments which were sought to be projected by the Revenue before it. 4. This Court, time and again, reminded the courts performing judicial functions, the manner in which judgments/orders are to be written but, it is, indeed, unfortunate that those guidelines issued from time to time are not being adhered to. 5. No doubt, it is true that brevity is an art but brevity without clarity likely to enter into the realm of absurdity, which is impermissible. This is what has been reflected in the impugned order which we would reproduce hereinafter. 6. We, therefore, before proceeding to decide the matter on merits, once again would like to reiterate few guidelines for the Courts, while writing orders and judgments to follow the same. 7. These guidelines are only illustrative in nature, not exhaustive and can further be elaborated looking to the need and requirement of a given case:- a) It should always be kept in mind that nothing should be written in the judgment/order, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income is loss, penalty cannot be levied under section 271 (1) (c) of the Income Tax Act in spite of the fact that Explanation 4 (a) was added in the Income Tax Act with effect from 1.4.1976 and subsequently, further clause (a) was replaced by another clause (a) which is in clarificatory nature, with effect from 1.4.2003?" 10. However, the Division Bench in its wisdom thought it fit to dispose of the appeal as under:- "Admitted facts are that the appellant has filed return showing loss and the income is also assessed as "NIL income". When the return was shown as loss as well as assessment of income is also NIL, no penalty under Section 271 (1) (c) of the Income Tax Act is attracted. No case is made out for admission of the appeal. The appeal stands dismissed at admission stage. Sd/- Judge Sd/- Judge" 11. Considering the important question of law and its wide repercussions, it was least expected from the Division Bench of the High Court to have dealt with the issue more seriously, keeping in mind the question of law that was being answered by it. 12. Feeling aggrieved, this appeal has been preferred by Revenue before us. Factual matrix is as under:- 13. On return being file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-Tax Appellate Tribunal, Ahmedabad. Tribunal, on the strength of an earlier order passed by Special Bench of Ahmedabad Tribunal in the case of Apsara Processors (P) Ltd. and Ors. in ITA No. 284/Ahd./2004 dated 17.12.2004 came to the conclusion that no penalty can be levied, if the returned income and the assessed income is loss. Accordingly, the orders passed by the Assessing Officer as well as Commissioner (Appeals) were set aside and quashed and the penalty imposed on the Assessee was deleted. It was this order of the Tribunal which was carried further by filing Appeal under Section 260A of the Act in the High Court, which met the fate of dismissal by the Division Bench. 19. Shri V. Shekhar, learned senior counsel appearing for the appellant at the outset contended that the point projected in this appeal stands answered in favour of the Revenue by a judgment of Bench of three learned Judges of this Court reported in (2008) 304 ITR 308 (SC) titled CIT Vs. Gold Coin Health (P) Ltd. 20. In Gold Coin (supra) an earlier judgment of this Court, reported in (2007) 289 ITR 83 SC titled Virtual Soft Systems Ltd. Vs. CIT, pronounced by two learned Judges has been over-ruled. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Wanchoo Committee, and Circular No. 204 dated 24.7.1976, it was clarified that points had been made clear with regard to Explanation 4 (a) to Section 271 (1) (c) (iii) to intend to levy penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income, but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or minus figure. Therefore, even during the period between 1.4.1976 and 1.4.2003, the position was that penalty was still leviable in a case where addition of concealed income reduces the returned loss. 27. In the aforesaid case, the expression "income" in the statute appearing in Section 2 (24) of the Act has been clarified to mean that it is an inclusive definition and includes losses, that is, negative profit. This has been held so on the strength of earlier judgments of this Court in CIT Vs. Harprasad and Co. P. Ltd (1975) 99 ITR 118 and followed in Reliance Jute and Industries Ltd. Vs. CIT (1979) 120 ITR 921. After elaborate and detailed discussion, this Court held with reference to the charging provisions of statute that the expression "inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, contended that the observations made in Gold Coin (supra) can at best be treated as obiter but not as binding precedent. According to him, the earlier judgment of the Coordinate Bench in CIT Vs. Elphinstone Spinning and Weaving Mills Co. Ltd. XL ITR 142, would still hold the field and applies fully to the facts of the said case. 32. Much emphasis has been laid on the following observations in Elphinstone (supra) reproduced hereinbelow: "There is no doubt that if the words of a taxing statute fail, then so much the tax. The courts cannot, except rarely and in clear cases, help the draftsmen by a favourable construction. Here, the difficulty is not one of inaccurate language only. It is really this that a very large number of taxpayers are within the words but some of them are not. Whether the enactment might fail in the former case on some other ground (as has happened in another case decided today) is not a matter we are dealing with at the moment. It is sufficient to say there that the words do not take in the modifications which the learned counsel for the appellant suggests. The word "additional" in the expression "additional income-tax" must refer to a state of affairs in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax" on "dividend income" earned by Assessee under paragraph - B of First Schedule to the Income Tax Act, 1922. (iii) Elphinstone (supra) interpreted five words occurring in para-B of First Schedule namely; "additional", "additional Income Tax", "charge on the total income", "profits liable to tax" and lastly, "dividends payable out of such profits", whereas, in Gold Coin's case, the question arose whether word "income" includes loss for the purpose of imposition of penalty u/s 271 (1) (c) and if Assessee incurs loss in any particular year then whether penalty u/s 271 (1) (c) can still be imposed on him. This has been categorically answered in Gold Coin (supra) in favour of Revenue and against the Assessee. (iv) The object of imposing penalty is different than that of determining Assessee's liability to pay tax or additional tax under any charging section. The interpretation applied to penalty provision thus, cannot be applied while interpreting any charging section for payment of income tax or additional tax. In other words, both provisions i.e. penalty and charging have different objects and consequences. They operate in different fields qua Assessee. (v) The liability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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