Arijit Pasayat, J. - (1.) Leave granted.
(2.) Expressing doubt about the correctness of the judgment rendered by a Division Bench of this Court in Virtual Soft Systems Ltd. vs. Commissioner of Income Tax, Delhi (2007) 9 SCC 665, a reference has been made by another Division Bench by order dated 7.4.2008 to a larger Bench. The question which was decided in Virtuals case (supra) was as to whether the penalty under Section 271 (1)(c) of the Income-tax Act, 1961 (in short the Act) can be levied if the returned income is a loss. This question has to be considered in the background of the amendment made by Finance Act, 2002 (in short Finance Act) w.e.f. 1.4.2003 in Explanation 4 to Section 271(1)(c)(iii) of the Act. In Virtuals case (supra) the department placed reliance on Notes on Clauses relating to the aforesaid amendment to submit that the amendment was clarificatory in nature and consequentially it was applicable retrospectively. This argument was rejected by this Court in para 52 of the judgment. The Division Bench while making reference was of the view that the true effect of the amendment was not considered, as it was prima facie of the view that merely because the amendment was stated to take effect from 1.4.2003 that cannot be a ground to hold that the same did have the retrospective effect.
(3.) Learned counsel for the appellant submitted that the true scope and ambit of the amendment has been lost sight of in Virtual Softs case (supra). It is submitted that the purpose behind Section 271(1) (c) is to penalize the assessee for (a) concealing particulars of the income; and/or (b) furnishing inaccurate particulars of such income. Therefore, whether income returned was a profit or loss was really of no consequence. It is pointed out that prior to the amendment, Section 271(1)(c)(iii) read as follows : "(iii) In the cases referred to in Clause (c, in addition to any tax payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of the income in respect of which the particulars have been concealed or inaccurate particulars have been furnished." ;