Judgment:
ORDER
Dhirendra Mshra, J.
1. The appellant has preferred this appeal against the order of Income-tax Appellate Tribunal (henceforth the 'Tribunal') Nagpur Bench, Nagpur dt. 15th March, 2004 in ITA No. 333/Nag/1999 on the following substantial question of law:
Whether on the facts and in the circumstances of the case, learned Tribunal was justified in upholding the order of CIT(A) in deleting the penalty of Rs. 2,13,720 levied by the AO under Section 271(1)(c) of IT Act, 1961?
2. Briefly stated, the facts of the case are that the respondent/assessee, which is a limited company, is engaged in the business of transportation. The company collected passenger tax along with journey fare from the passengers. The company followed mercantile system of accounting and on that basis the liability of passenger tax to the extent of Rs. 3,90,990 was allowed in the year of accrual as a deduction while computing income. Although the company collected passenger tax and claimed the liability to pay such tax in its accounts, it disputed the levy before the appropriate authorities. High Court of Madhya Pradesh vide its judgment, quantified the liability of passenger tax at Rs. 1,59,966 as against Rs. 3,90,990. The assessee company has obtained benefit of passenger tax of an amount of Rs. 2,13,720 by way of remission. The aforesaid amount became chargeable to tax as profits and gains under the deeming provisions of Section 41(1) of the IT Act. However, the assessee company did not declare the aforesaid amount as profits in its account for assessment in the year 1974-75 and also did not furnish any particulars thereof in the return for that year. On account of failure of the assessee company, action under Section 148 was taken and on completion of assessment, proceedings under Section 271(1)(c) were initiated for imposing penalty. Penalty was also levied later on.
3. The Tribunal dismissed the appeal of the Revenue with a finding that since the assessee suffered loss in the relevant financial year and even after addition of the evaded income, there comes no positive income hence penalty under Section 271(1)(c) could not be imposed.
4. Sub-clause (a) to Expln. 4 of Section 271 was substituted by the Finance Act, 2002 w.e.f. 1st April, 2003, according to which the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished has the effect of reducing the loss declared in the return or converting that loss into income, means the tax that would have been chargeable on the income in respect of which particulars have been concealed or inaccurate particulars have been furnished had such income been the total income.
5. Hon'ble Supreme Court in the matter of Virtual Soft Systems Ltd. v. CIT : (2007) 207 CTR (SC) 733, has held that the said amendment would come into effect on 1st of April, 2003 and would apply only to the future periods and not to any period prior to 1st of April, 2003 or to any assessment year prior to the asst. yr. 2003-04.
6. In view of the above settled principles of law, we are satisfied that the order of Tribunal is in accordance with law and no substantial question of law as proposed by the appellant/Revenue arises for adjudication of this appeal. The appeal is accordingly dismissed.