The Commissioner Of Income Tax, Faridabad v. M/S Nuchem Limited, Faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. ITA No.133 of 2009 (O&M)Date of decision: 15.7.2009 The Commissioner of Income Tax, Faridabad Vs. M/s Nuchem Limited, Faridabad -----Appellant Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:-Mr. Rajesh Katoch, Advocate for the revenue. Mr. Baljinder Singh, Advocate for the respondent-assessee. Adarsh Kumar Goel,J. 1. The revenue has preferred this appeal under section 260A of the Income Tax Act, 1961 (in short, ‘the Act’) againstorder dated 7.12.2007 passed by the Income Tax AppellateTribunal, Bench ‘H’ New Delhi in ITA No.1958(DEL) of 2007, forthe assessment year 1995-96, proposing to raise followingsubstantial questions of law:- “i) Whether on the facts and circumstances of thecase, the Hon’ble Tribunal is justified in holdingthat the judgment in Virtual Soft Systems Limited v. CIT, 289-ITR-83 (SC) will apply evenafter insertion of Explanation 4 to Section 271(1)(c) of the Income Tax Act, 1961 with effect from1.4.1976? ii) Whether on the facts and circumstances of thecase, the Hon’ble Tribunal is right in deleting thepenalty imposed under section 271(1)( c) of theIncome Tax Act, 1961 on the ground that the totalincome of the assessee has been assessed at a lossfigure? iii) Whether, on the facts and in the circumstancesof the case, the Hon’ble ITAT is right inconfirming the deletion of penalty under section271(1) ( c) by relying on the Apex Court decisionin the case of Virtual Soft Systems Limited (289-ITR-83) though the issue of retrospectivity hasbeen referred to the Chief Justice of the Hon’bleSupreme Court as per (2008) 217 CTR (SC)105?” 2.The assessee filed return of loss. The Assessing Officerwhile determining the net income to be nil, made additions to thereturned income. The CIT(A) deleted some of the additions. TheAssessing Officer initiated penalty proceedings in respect ofadditions, which were sustained by CIT(A). On appeal, the CIT(A) set aside the penalty on the ground that where the return is of lossand income assessed is nil, there could be no penalty. This viewhas been upheld by the Tribunal, inter-alia, in view of judgment of the Hon’ble Supreme Court in Virtual Soft Systems Limited(supra), wherein it was held that in absence of any positive incomeand tax being attracted, penalty for concealment could not belevied. 3.Learned counsel for the revenue submits that the view taken in Virtual Soft Systems Limited(supra) has since beenoverruled in subsequent judgment of the Hon’ble Supreme Court in CIT v. Gold Coin Health and Food Private Limited,(2008) 304ITR 308. 4.In view of above, the questions proposed have to beanswered in favour of the revenue and against the assessee. 5.Accordingly, we set aside the view taken by theTribunal and remand the matter to the Tribunal for decision onremaining points, which may survive. 6.The appeal is disposed of. (Adarsh Kumar Goel) Judge July 15, 2009‘gs’ (Daya Chaudhary) Judge