TaxTMI 
TaxTMI 
2014 (2) TMI 750
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....ether in the facts and circumstances of the case, the Tribunal was legally correct to hold that the judgment of the Hon'ble Supreme Court in the case of Prithipal Singh & Co. (249 ITR p. 760) was applicable even after insertion of Explanation 4 to Section 271 of the Act with effect from 1.4.1976."? (3)Whether in the facts and circumstances of the case, the Tribunal is justified in law in ignoring that the Explanation 4 to Section 271 brought on the statute w.e.f. 01.04.1976 is clarificatory in nature as explanation so brought to the main provision is merely a mandate to explain or clarify certain ambiguities which hae crept in the statutory provision (Reliance CIT Vs. Mohan Meakin Industries Ltd., (1991) 192 ITR 131 (High Power Committee....
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....P. Ltd. as well as subsequent judgment of the apex Court in [2012] 27 taxmann.com 87 (SC) Commissioner of Income-tax Vs. Unipol Chemicals Intermediates Ltd. The Explanation 4 (a) to Section 271 (1) (c) has been substituted by Finance Act w.e.f. 1.4.2003. The amended Explanation 4(a) provides as follows page 1.972 . . "Explanation 4.--For the purposes of clause (iii) of this sub-section, the expression "the amount of tax sought to be evaded",-- (a) in any case where the amount of 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 converting that loss into income, means the tax that would have been chargeable on the income....
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.... 271(1)(c) was not in existence. The view of this Court in Harprasad's case (supra) leads to the irresistible conclusion that income also includes losses. 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 again....
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....mmittee's recommendations and the Circular makes the position clear that Explanation 4(a) to Section 271(1)(c) intended to levy the 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 a minus figure. therefore, even during the period between 1.4.1976 to 1.4.2003 the position was that the penalty was leviable even in a case where addition of concealed income reduces the returned loss. 11. When the word "income" is read to include losses as held in Harprasad's case (supra) it becomes crystal clear that even in a case where on account of a....