The Commissioner Of Income-Tax, Jalandhar-I, Jalandhar v. M/S Sachkahnd Packwell Pvt. Ltd, Jalandhar

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.85 of 2005Date of decision: 25.8.2008 The Commissioner of Income-tax, Jalandhar-I, Jalandhar. -----Appellant Vs. M/s Sachkahnd Packwell Pvt. Ltd, Jalandhar. -----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE AJAY TEWARI Present:Mr. Vineet Sehgal, Advocate for the revenue.for the revenue. ----- ORDER: This appeal has been preferred by the revenue against the orderof Income Tax Appellate Tribunal, Amritsar Bench, Amritsar in I.T.A.No.92(ASR)/1997 dated 30.4.2004 for the assessment year 1990-91 proposingfollowing substantial questions of law:- “(1)Whether on the facts and circumstances of the case, theLd. ITAT was right in law in holding that imposition ofpenalty u/s 271(1)(c) of the Act is not exigible in theabsence of any positive taxable income.Ld. ITAT was right in law in holding that imposition ofpenalty u/s 271(1)(c) of the Act is not exigible in theabsence of any positive taxable income. (1a)Whether on the facts and circumstances of the case, theorder of the ITAT is perverse in law in view of explanation4 to section 271(1)(c) of the Act.”order of the ITAT is perverse in law in view of explanation4 to section 271(1)(c) of the Act.” The assessee filed its return for the assessment year 1990-91,declaring loss of Rs.2,02,160/-. During assessment, even after makingadditions, the case resulted into loss, there being unabsorbed depreciationand no demand for tax was made. The Assessing Officer, however, imposedpenalty of Rs.2,51,319/-. On appeal, the said amount was reduced toRs.21,001/-. The Tribunal following the judgment of the Hon’ble SupremeCourt inCIT v. Prithi Pal Singh and Co.(2001) 249 ITR 670 held that nopenalty could be imposed in absence of any positive taxable income. In support of the present appeal, reliance has been placed onexplanation 4 to Section 271(1)(c) of the Income Tax Act, 1961 (for short, “theAct”) w.e.f. 1.4.2003, to submit that even in absence of positive taxableincome, penalty could be imposed. Hearing of the appeal was deferred till the decision of the FullBench in I.T.A. No.68 of 1999. I.T.A. No.68 of 1999 has since been decidedby the Full Bench on 17.10.2007 against the revenue following the judgmentof the Hon’ble Supreme Court in Virtual Soft Systems Ltd. v.Commissioner of Income Tax (2007) 289 ITR 83 wherein it was held thatamendment to Section 271(1)(c) of the Act with effect from 1.4.2003, did notaffect the case of earlier assessment years and in absence of positiveincome, no penalty could be imposed. In view of above, no substantial questions of law survives forconsideration. The appeal is dismissed. ( ADARSH KUMAR GOEL )JUDGE ( AJAY TEWARI ) JUDGE