TAX CAN BE LEVIED EVEN IF THE RETURNED INCOME IS A LOSS

The Supreme Court has overruled its own decision of last year in Virtual Soft Systems Ltd vs. Commissioner of Income Tax and ruled that penalty can be levied under Section 271 (1)(c) of the I-T Act even if the returned income is a loss. In the latest judgment, involving Gold Coin Health Food Ltd, a larger bench stated that the amendment made by the Finance Act 2002 to the provision was clarificatory and not substantive and it was applicable retrospectively. The Supreme Court said that the purpose of the provision was to penalize the assessee for concealing income or furnishing inaccurate particulars. Therefore, whether the income returned was profit or loss did not matter.