TaxTMI 
TaxTMI 
2003 (2) TMI 17
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....g the levy of penalty under section 271(1)(c) on the ground that no penalty can be levied where the assessed income is a loss, ignoring the provisions of Explanation 4 below section 271(1)(c), though holding that there was concealment of income and furnishing of inaccurate particulars by making wrong claim under section 80HHC of Rs. 8,37,871 by the assessee? (2) Whether, on the facts and in the circumstances of the case, and in law, the honourable Income-tax Appellate Tribunal was right in observing that there was no concealment of income on account of adjustment of Rs. 1,07,27,006 being income for earlier years ignoring that the assessee had offered this amount of tax only after the issuance of notice under section 148?" Facts: On....
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.... amounting to Rs. 61,89,955. Being aggrieved by the order imposing penalty, the assessee carried the matter in appeal to the Commissioner of Income-tax (Appeals) who took the view that penalty was not justified because the assessee had declared the loss in the return. That, it was a genuine mistake committed by the assessee which could have been rectified by prima facie adjustment under section 143(1)(a) and, therefore, there was no need for the Assessing Officer to issue notice under section 148. That, what was achieved by the assessee being framed under section 143(3)/147, could have been achieved by making prima facie adjustment under section 143(1)(a) because the mistake committed by the assessee went unnoticed and even the Assessing Of....
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.... our attention to the provisions of section 271(1)(c) read with Explanation 4. He also relied upon the judgment of the Karnataka High Court in the case of P.R. Basavappa and Sons v. CIT [2000] 243 ITR 776, which has taken the view that since loss declared was reduced on detection of the concealment of income, penalty under section 271(1)(c) was leviable. The Karnataka High Court further took the view that the decision of the Punjab and Haryana High Court in the case of Prithipal Singh [1990] 183 ITR 69 was not applicable as that judgment was concerning the assessment year 1970-71, i.e., before the insertion of Explanation 4 and, therefore, the judgment in Prithipal Singh's case [1990] 183 ITR 69 (P & H) was not applicable to the cases falli....
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....ishing of inaccurate particulars of such income, could be imposed. Explanation 4 has defined the expression "the amount of tax sought to be evaded". The said Explanation reads as follows: "(a) in any case where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished exceeds the total income assessed, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income; (b) in any case to which Explanation 3 applies, means the tax on the total income assessed; (c) in any other case, means the difference between the tax on the total income assesse....
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....9 was applicable to the assessment year 1970-71 whereas, we are concerned with the assessment year 1988-89 when Explanation 4 was in the statute. One more aspect needs to be mentioned. By the Finance Bill, 2002, section 271 of the Income-tax Act has been amended vide clause 97. By clause 97(f) of the Finance Bill, 2002, it is clarified that in cases where the amount of income in respect of which particulars have been concealed has the effect of reducing the loss declared in the return then the amount of tax sought to be evaded shall be the tax that would have been chargeable on the amount of such income as if such income was the total income. This amendment is clarificatory in nature. It is so stated in the Finance Bill, 2002 : Notes on Cla....