IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. ITA No.133 of 2009 (O&M) Date of decision: 15.7.2009 The Commissioner of Income Tax, Faridabad -----Appellant Vs. M/s Nuchem Limited, Faridabad Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON'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’) against order dated 7.12.2007 passed by the Income Tax Appellate Tribunal, Bench ‘H’ New Delhi in ITA No.1958(DEL) of 2007, for the assessment year 1995-96, proposing to raise following substantial questions of law:- “i) Whether on the facts and circumstances of the case, the Hon’ble Tribunal is justified in holding that the judgment in Virtual Soft Systems ITA No.133 of 2009 (O&M) Limited v. CIT, 289-ITR-83 (SC) will apply even after insertion of Explanation 4 to Section 271(1) (c) of the Income Tax Act, 1961 with effect from 1.4.1976? ii) Whether on the facts and circumstances of the case, the Hon’ble Tribunal is right in deleting the penalty imposed under section 271(1)( c) of the Income Tax Act, 1961 on the ground that the total income of the assessee has been assessed at a loss figure? iii) Whether, on the facts and in the circumstances of the case, the Hon’ble ITAT is right in confirming the deletion of penalty under section 271(1) ( c) by relying on the Apex Court decision in the case of Virtual Soft Systems Limited (289- ITR-83) though the issue of retrospectivity has been referred to the Chief Justice of the Hon’ble Supreme Court as per (2008) 217 CTR (SC) 105?” 2. The assessee filed return of loss. The Assessing Officer while determining the net income to be nil, made additions to the returned income. The CIT(A) deleted some of the additions. The Assessing Officer initiated penalty proceedings in respect of additions, which were sustained by CIT(A). On appeal, the CIT(A) 2 ITA No.133 of 2009 (O&M) set aside the penalty on the ground that where the return is of loss and income assessed is nil, there could be no penalty. This view has 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 income and tax being attracted, penalty for concealment could not be levied. 3. Learned counsel for the revenue submits that the view taken in Virtual Soft Systems Limited (supra) has since been overruled in subsequent judgment of the Hon’ble Supreme Court in CIT v. Gold Coin Health and Food Private Limited, (2008) 304 ITR 308. 4. In view of above, the questions proposed have to be answered in favour of the revenue and against the assessee. 5. Accordingly, we set aside the view taken by the Tribunal and remand the matter to the Tribunal for decision on remaining points, which may survive. 6. The appeal is disposed of. (Adarsh Kumar Goel) Judge July 15, 2009 (Daya Chaudhary) ‘gs’ Judge 3 ITA No.133 of 2009 (O&M) 4