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TMI Blog2008 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amendment was clarificatory in nature and consequentially it was applicable retrospectively. This argument was rejected by this Court in para 52 of the judgment. The Division Bench while making reference was of the view that the true effect of the amendment was not considered, as it was prima facie of the view that merely because the amendment was stated to take effect from 1.4.2003 that cannot be a ground to hold that the same did have the retrospective effect. 3. Learned counsel for the appellant submitted that the true scope and ambit of the amendment has been lost sight of in Virtual Soft's case (supra). It is submitted that the purpose behind Section 271(1) (c) is to penalize the assessee for (a) concealing particulars of the income; and/or (b) furnishing inaccurate particulars of such income. Therefore, whether income returned was a profit or loss was really of no consequence. It is pointed out that prior to the amendment, Section 271(1) (c)(iii) read as follows: "(iii) In the cases referred to in Clause (c), in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been concealed or inaccurate particulars furnished. It is proposed to amend the section to include a reference to the Commissioner as being an authority who can initiate any levy penalty under sub-section (1) of the said section. Similar reference is proposed to be made in Explanation 1 and Explanation 7 to the said sub-section. Amendment on similar lines is proposed to be made in Section 18 of the Wealth Tax Act. These amendments will take effect from Ist June, 2002. The existing provisions of clauses (ii) and (iii) of sub-section (1) of the said section provide for levy of the penalty specified therein in addition to any tax payable. It is proposed to amend the said clauses to clarify that the penalty specified in them can be levied even if no tax is payable on the total income assessed. The Bill further proposes to amend Explanation 4 which defines the expression `the amount of tax sought to be evaded in different circumstances, to clarify that in cases where the income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or of converting the loss into inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation 4 (a) as it stood during the period 1.4.1976 to 1.4.2003 has to be considered in the background. 8. It appears that what the Finance Act intended was to make the position explicit which otherwise was implied. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome". 12. 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. 13. In Commissioner of Wealth Tax, Punjab, J & K, Chandigarh, Patiala v. Yuvraj Amrinder Singh and Ors. (1985 (4) SCC 609) the relevance of Notes on Clauses was highlighted. Para 15 reads as follows: "15. The proviso to sub-clause (vi) has been reproduced above. It has the effect of cutting down the exemption contained in the sub- clause to some extent. It commences with the words "Provided that in the case of a policy of insurance the premium or other payment whereon is payable during a period of less than 10 years" and the argument is that the italicized words suggest that the expression "any policy of insurance" in the main sub- clause must mean a po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port to the view which we have just expressed. The relevant portion of "Notes on clauses" states that, "under this amendment (the insertion of proviso) the value of the taxpayer's right or interest in a policy of insurance will be exempt from tax only if the premia are payable over a period of ten years or more. In cases where premia are payable over a period of less than ten years, only a proportionate amount of the value of the taxpayer's right or interest in the policy of insurance will be exempt from wealth tax". The Finance Minister's speech, though strictly not relevant as an aid to construction, substantially reiterates what has been stated in the "Notes on clauses" accompanying the Bill. On this account, therefore, there is no warrant to put a narrow construction on the expression "any policy of insurance" occurring in sub-clause (vi) of Section 5(1)." 14. As noted by this Court in Commissioner of Income Tax, Bombay and Ors. v. Podar Cement Pvt. Ltd. and Ors. (1997 (5) SCC 482) the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 1), it was observed as follows: "13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the legislature to affect existing rights, it is deemed to be prospective only -- "nova constitutio futuris formam imponere debet non praeteritis" -- a new law ought to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at p. 438.) It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid., p. 440). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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