Commissioner of Income Tax vs Pioneer Ltd.

The present IT appeal filed u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as the ''Act'') has been admitted vide order dated 20-1-2005 on the following substantial questions of law:

Whether on the facts and in the circumstances of the case the learned Tribunal has rightly cancelled the penalty imposed u/s 271(1)(c) of the Act on the ground that the income returned by the assessee at loss was also assessed at loss. Whether on the facts and the circumstances of the case the learned Tribunal has failed to appreciate, while cancelling the penalty u/s 271(1)(c) that the year involved in the case of Commissioner of Income Tax Vs. Prithipal Singh and Co., relied upon by the learned Tribunal was for the assessment year 1970-71 and after the insertion of Expln. 4 to Section 271(1)(c) with effect from assessment year 1976-77 the law laid down in the above case would not apply in the present case which pertains to assessment year 1986-87. Whether on the facts and circumstances of the case the learned Tribunal has failed to appreciate that the Hon''ble Karnataka High Court in the case of P.R. Basavappa and Sons Vs. Commissioner of Income Tax, has upheld the levy of penalty u/s 271(1)(c) in case of the assessee''s income being in loss.

Briefly stated the facts giving rise to the present appeal are as follows:

The respondent assessee is a public limited company and is engaged in the business of printing and publishing of newspapers and journals etc. For the assessment year 1987-88 the assessee had filed its return of loss of Rs. 77,91, 590. The assessment was completed u/s 143(3) of the Act on 24-3-1993 on a total loss of Rs. 22,758 as against the returned loss of Rs. 77,91,590. As the amount of loss was reduced in the assessment proceeding, the proceedings u/s 271(1)(c) of the Act for imposition of penalty for concealment was initiated. The Dy. CIT, Special Range-I, Lucknow vide order dated 22-3-1996 after considering the explanation given by the assessee imposed a sum of Rs. 30,00,000 as penalty. Feeling aggrieved the assessee preferred an appeal before the Commissioner (Appeals) who vide order dated 20-12-1996 partly allowed the appeal and cancelled the order of penalty which has been upheld by the Tribunal.

We have heard Sri D.D. Chopra, learned senior standing counsel for the revenue and Sri Neerav Chitravanshi, learned Counsel appearing for the respondent assessee.

The learned senior standing counsel submitted that in view of the Expln. 4 to Section 271 of the Act where the figure of loss is reduced penalty is exigible as there is concealment of part of the income. It may be mentioned here that prior to 1-4-2003 under the then Expln. 4 no penalty was exigible where the figure of loss declared in the return is reduced. This position has been upheld by the apex court in Virtual Soft Systems Ltd. Vs. Commissioner of Income Tax, Delhi-I, The situation changed after substitution of Clause (a) in Expln. 4 of the Act with effect from 1-4-2003. The apex court has held that the aforesaid amendment is not retrospective in nature.

Respectfully following the aforesaid decision, we are of the considered opinion that the Tribunal was justified in holding that no penalty was exigible in the present case.

The appeal accordingly fails and is dismissed. However, there shall be no order as to costs.