In Brief
The Supreme Court addressed whether penalty under Section 271(1)(c) of the Income Tax Act, 1961 can be imposed when both the returned income and assessed income are losses, though the assessed loss is lower. The Court held that penalty can be levied despite the loss position, as the statutory amendment operates retrospectively and is clarificatory in nature. The Tribunal had wrongly cancelled the penalty merely because both returned and assessed incomes were losses. The appeal was allowed and remitted for determining the appropriate quantum of penalty.
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