Penalty for concealment of income leviable if returned income is a loss

Sensex Up by 500 Points in intra day trading as bargain hunters enter the market Anti dumping duty imposed on import of Acrylic Fibre from Korea RP & Thailand-Customs Tariff Notification No.123 Singer Michael Jackson converts to Islam and changes his name to Mikaeel Debit of advance authorization/DFIA based on balance CIF value of inputs in freely convertible currency-DGFT Circular No.41 Export of edible oils permitted in branded consumer packs of up to 5 Kgs, subject to a limit of 10,000 tons during the next one year up to 31st October, 2009- Export of fish oil allowed freely-DGFT Notification No.60 DTAA between India and Tajikistan signed Authority for Advance Rulings rules the tax payable on the long term capital gains arising on sale of equity shares of Foseco India Ltd., being listed securities, will be 10 per cent of the amount of capital gains as per the proviso to section 112(1) of the Income-tax Act-While calculating the amount of long term capital gain chargeable to tax interest paid by the applicant to the shareholders of Foseco India Limited as per the directives of the SEBI will also be treated as a part of the cost of acquisition of the shares-AIT-2008-416-AAR Authority for Advance Rulings rules the income derived by the applicant on the purchase in India and export of gold jewellery accrues or arises in India and is taxable in India-AIT-2008-417-AAR Exchange Rate for imported goods is Rs 74.03 Per Pound Sterling and Rs 51.22 Per 100 Yen-Exchange Rate for export is Rs 72.45 Per Pound Sterling and Rs 49.94 Per 100 Yen-Customs Non-Tariff Notification No.128 100 per cent EOUs allowed to export non-basmati rice-DGFT Notification No.59 Customs duty of 5 per cent imposed on import of Pig Iron, spiegeleisen, semi-finished products, flat products & long products Import of Crude Soyabean Oil subjected to 20 per cent customs duty- no change in import duty on refined soyabean oil-Customs Tariff Notification No.122 Time-limit for filing refund of service tax extended to 6 months-Service Tax Notification No.32 Tariff Value for import of Brass Scrap is 3525 and for poppy seeds 5206-Customs Non-Tariff Notification No. 127 CBEC clarifies the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise-Central Excise Circular No.877 Mandavariya (Kishangarh), District Ajmer notified for Unloading of imported goods and loading of export goods-Customs Non-Tariff Notification No.117 SC Ruling-the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act- conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounted to manufacture/production-AIT-2008-413-SC SC Ruling-Whether any "gift" arose in terms of Section 2(xii) of the Gift-tax Act, 1958 on the allotment of rights issue by the appellant company to its shareholders vide Board's Resolution- Whether there was any element of "gift" as defined under Section 2(xii) in the appellant issuing Bonus shares in the ratio of 1:23-AIT-2008-412-SC HC Ruling-Income Tax-"reserves" arising out of the acquisition of the business of Tata Cellular Limited could never have the character of "income" in the hands of the petitioners-pre-requisite condition contained in proviso to section 147 to enable the re-assessment to be opened after period of 4 years have elapsed have not been met-AIT-2008-410-HC HC Ruling-Central Excise- valuation of the goods for the purpose of excise duty and whether excise duty was chargeable under Section 4 or Section 4A of the Central Excise Act 1944-while construing rule 3, who are excluded are only the institutional or industrial consumers as explained in Rule 2A and the industrial or institutional consumers in terms of the proviso to rule 2(p) for the purpose of chapter-II are the same-If the person who purchase the prepacked commodity not directly from the manufacturer or packers, they are consumers and the declaration will be of no effect-AIT-2008-408-HC Government considering imposition of import duty on steel Bad News for Consulting Engineers- whether turnkey contract can be vivisected?- The conclusion in Daelim case on the point, prima facie, being not in accordance with law, matter goes to Larger Bench-AIT-2008-405-CESTAT Larger Bench of CESTAT rules Credit is admissible on an input service relating to the business-AIT-2008-407-CESTAT credit of the service tax paid on the outdoor catering (canteen) service is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004-AIT-2008-406-CESTAT The payment for use of "services for MTNL/other companies via the interconnect/port/access/toll by the assessee would not fall within the purview of payments as provided for under section 194J of the Act, so as to be eligible for tax deduction at source-The interconnect charges/port access charges cannot be regarded as fees for technical services-AIT-2008-404-HC Computation of Value under Section 14 for Levy of Export Duty - Customs Circular No. 18 Export duty of 8 per cent notified in place of earlier rate of Rs. 200 per tonne on export of iron ore fines-Customs Tariff Notification No.121 Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Second Amendment Rules, 2008-Central Excise Non-Tariff Notification No.45 service tax paid under Section 66A is available as 'input credit' under Cenvat Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service-Service Tax Trade Notice No.43/2008

JUDGMENTS

CENTRAL EXCISE

CUSTOMS

exchange rate

SERVICE TAX

INCOME TAX

VAT

FINANCE ACTS

FINANCE BILLS

EOU STPI

SEZ

DGFT

RBI

NTT

RESOURCES

Email | Print

Penalty for concealment of income leviable if returned income is a loss

AIT News Network

NEW DELHI. Larger Bench of Supreme Court vide a significant ruling AIT-2008-286-SC has overruled the decision of Supreme Court in case of Virtual Soft Systems Ltd. V. Commissioner of Income Tax, Delhi AIT-2007-83-SC and has ruled that the penalty under Section 271 (1) (c) of the Income Tax Act, 1961 can be levied if the returned income is a loss holding that Explanation 4 to Section 271(1)(c) of Income Tax Act is clarificatory and not substantive and the view expressed to the contrary in Virtual's case AIT-2007-83-SC is not correct..

The Ruling has been pronounced on August 18, 2008 in case of Commissioner of Income Tax-I, Ahmedabad Versus Gold Coin Health Food Pvt. Ltd AIT-2008-286-SC by the Larger Bench comprising of Arijit Pasayat J, P. Sathasivam J and Aftab Alam J

In case of Virtual Soft Systems Ltd. V. Commissioner of Income Tax, Delhi AIT-2007-83-SC; the SC held as under

“Prior to its amendment by Finance Act, 2002 in the absence of any positive income and no tax being levied, penalty for concealment of income could not be levied. The view taken by the Karnataka High Court in P.R. Basavapaa & Sons v. CIT and CIT v. Chemiequip Ltd. , does not lay down the correct law.The position stands altered after the amendment in law by the amendment of Section 271(1)(c) and Explanation 4(a) by the Finance Act, 2002 w.e.f. 1.4.2003.”

Expressing doubt about the correctness of the judgment rendered by a Division Bench of this Court in Virtual Soft Systems Ltd. V. Commissioner of Income Tax, Delhi AIT-2007-83-SC , a reference was made by another Division Bench by order dated 7.4.2008 to a larger Bench. The question which was decided in Virtual's case was as to whether the penalty under Section 271 (1) (c) of the Income Tax Act, 1961 can be levied if the returned income is a loss. This question has to be considered in the background of the amendment made by Finance Act, 2002 w.e.f. 1.4.2003 in Explanation 4 to Section 271(1)(c)(iii) of the Act. In Virtual's case the department placed reliance on Notes on Clauses relating to the aforesaid amendment to submit that the amendment was clarificatory in nature and consequentially it was applicable retrospectively. This argument was rejected by SC 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.

SC also observed that “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.”

(Click here for full text of Ruling AIT-2008-286-SC)

Related News: