TMI Blog2021 (11) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent : Sri.Ganesh R.Ghale, Standing Counsel ORDER This appeal at the instance of the assessee is directed against CIT(A) s order dated 18.08.2021. The relevant assessment year is 2018-2019. 2. The grounds raised reads as follows: 1. The impugned order made by the Respondent is opposed to law and scheme of the Act and is improper, irregular, incorrect and opposed to facts and law and hence liable to set aside. 2. The learned CIT(Appeals) erred in upholding the addition of ₹ 3,23,886 made by the Assessing Officer u/s 36(1)(va) of the Income Tax Act, 1961 disregarding the facts of the case. 3. The learned CIT(Appeals) erred in upholding the impugned addition of ₹ 3,23,886 made by the AO u/s 36(1)(va) disregarding the fact that the appellant remitted the same before the due date specified u/s 139(1) of the Act. 4. The learned CIT(Appeals) erred in upholding the impugned addition of ₹ 3,23,886 made u/s 36(1)(va) disregarding the fact that the amended provisions being prospective is not applicable to the A.Y. 2018-19. 5. The learned CIT(Appeals) erred in upholding the impugned addition of ₹ 3,23,886 disregarding the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the A.O. may be directed to follow the outcome of the judgment of the Hon ble Supreme Court. 7. The AR in rejoinder submitted the case law relied on by the learned DR viz., CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is distinguishable on facts. It was submitted that the conclusion of the Hon ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is based on settled position of law that income includes also loss. It was submitted that it is in this context that the Hon ble Apex Court held that penalty under section 271(1)(c) of the Act could be imposed even in the case of assessment where the income is determined at loss. Learned AR strongly relied on the larger Bench judgment of the Hon ble Apex Court in the case of CIT Vs. Vatika Township Pvt. Ltd., reported in 367 ITR 466 wherein it was held that provision for levy of surcharge on income tax in the case of block assessment is not clarificatory and therefore not retrospective in operation. 8. I have heard rival submissions and perused the material on record. On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra) had held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view taken by the Gujarat High Court. WE agree with the view taken by this Court in W.A.No.4077/2013. 23. In the result, the appeal is allowed and the substantial question of law framed by us is answered in favour of the appellant-assessee and against the respondent-revenue. There shall be no order as to costs. 7.2 The further question is whether the amendment to section 36[1][va] and 43B of the Act by Finance Act, 2021 is clarificatory and declaratory in nature. The Hon'ble Supreme Court in the recent judgment in the case of M.M.Aqua Technologies Limited v. CIT reported in (2021) 436 ITR 582 (SC) had held that retrospective provision in a taxing Act which is for the removal of doubts cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood (page 597). In this case, in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sinequo- non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression if any and also in Explanation 4 setting out the meaning of the phrase amount of tax sought to be evaded . The Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food [P] Ltd., [2008] 304 ITR 308 [SC], held that the Parliament clarified the position by using the expression if any , which was not a substantive amendment creating penalty for the first time. It was held that income always included loss and even the unamended provisions would have to be interpreted in the manner that right from 01.06.1976 penalty would have been leviable. Hence, the Hon'ble Apex Court went on to hold that the amendment is clarificatory in nature and hence will apply for the period before 01.04.2003. The relevant observations of the Hon'ble Apex Court reads as follows :- 6. It would be of some relevance to take note of what this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The recommendations of the Wanchoo Committee pursuant to which Explanation 4(a) was inserted w.e.f. 1.4.1976 needs to be noted. At para 2.74 it was noted as follows: 2.74 We are not unaware that linking concealment penalty to tax sought to be evaded can, at times, lead to anomalies. We would recommend that, in cases where the concealed income is to be, set off against Losses incurred by an assessee under other heads of income or against losses brought forward from earlier years, and the total income thus, gets reduced to a figure smaller than the concealed income or even to a minus figure, the tax sought to be evaded should be calculated as if the concealed income were the total income. 9. Reference to the Department Circular No.204 dated 24.7.1976 reported in 1977 (110) ITR 21 (St.) has also substantial relevance. Same reads as follows: New Explanation 4 defines 'the amount of tax sought to be evaded'. According to the definition, this expression will ordinarily mean the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved jurisprudence on the point of whether income includes loss and has interpreted that even before the amendment with effect from 01.04.2003, there was liability to penalty. Hence, it was concluded by the Hon'ble Apex Court that the clarificatory nature of the amendment cannot be a ground to hold that earlier no penalty could be levied. However, the position in this case quite different as the Hon'ble jurisdictional High Court in the case of Essae Teraoka [P] Ltd., Vs. DCIT, reported in [2014] 366 ITR 408 [Kar] has considered the concept of 'due date' as appearing in 36[1][va] and section 43B of the Act and has taken the view that the assessee is entitled to the relief having regard to the use of the expression contribution under the Provident Fund Act. Now it has been provided that the due date in section 43B is of no consequence to judge the applicability of provisions of section 36[1][va]of the Act and that too with effect from 01.04.2021. In other words, there is sufficient intrinsic evidence to show that these amendments are not clarificatory in nature and the mere use of the expression it is clarified cannot be determinative of the nature of the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should 'not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips vs. Eyre', a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 32. The obvious basis of the principle against retrospectivity is the principle of fairness, which must be the basis of every legal rule as was observed in the decision reported in L 'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation. is for purpose of supplyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here 8.4 The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) considered the judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supra) and also the judgment of the Larger Bench of the Hon'ble Apex Court in the case of CIT v. Vatika Township P. Ltd. (supra). The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (supra), held that judgment in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supra) is distinguishable and not applicable for the reason that Parliament clarified the position of law by changing the expression `any' by `if any' which was not a substantive amendment creating penalty for the first time. The Hon'ble Supreme Court followed the judgment in the case of CIT v. Vatika Township P. Ltd. (supra) and held that Rule 8D of the I.T.Rules does not apply retrospectively. For the aforesaid reason and the judicial pronouncements, cited supra, I hold that the judgment of the Hon'ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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