Virtual Soft Systems Ltd. v. CIT

289 ITR 83Supreme Court of India2007#1240 most cited

What is Virtual Soft Systems Ltd. v. CIT authority for?

Section 271 of the Income-tax Act, being a penal provision, must be construed strictly and narrowly. The case also initially held that a clarificatory amendment was not retrospectively applicable, a view later reversed by a larger bench.

91

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2007 to 2025.

Also referred to as

Virtual Soft Systems Ltd v CIT · Section 271 · penal provision · strict interpretation · mens rea · concealment of income penalty · retrospective amendment · Gold Coin Health Food Pvt Ltd · 289 ITR 83 · 159 Taxmann 155

Also reported as

159 Taxmann 155

Sections most often in play

Section 115BBESection 132Section 132ASection 133ASection 135ASection 139Section 140A(4)Section 144C(13)
Read the full judgment

Issues it is cited on

employees contribution to pfsection 2(24)(x)section 2(24)section 36(1)(va)concealment of incomesection 43bsection 36(1)section 43section 36section 271(1)section 271section 139(1)

Judgments citing Virtual Soft Systems Ltd. v. CIT

M/S Bbr (India) Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 92/BANG/2022[2017-18]Status: DisposedITAT Bangalore24 Mar 2022AY 2017-18

Bench: Shri Chandra Poojari, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.Ramasubramaniam, CAFor Respondent: Sri.Priyadarshini Mishra, Addl.CIT-DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

S N Balasubramaniya, Bangalore vs. Assistant Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 60/BANG/2022[2019-20]Status: DisposedITAT Bangalore16 Mar 2022AY 2019-20

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Sandeep C, CAFor Respondent: Sri.Kannan Narayanan., Addl.CIT-DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Karle Infrastructure Private Limited, Bengaluru vs. Assistant Director of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 40/BANG/2022[2019-20]Status: DisposedITAT Bangalore16 Mar 2022AY 2019-20

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Smt.Suman Lunkar, CAFor Respondent: Sri.Narayana K.R., Addl.CIT-DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 250Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Channa Keshava, Bangalore vs. Assistant Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 601/BANG/2021[2018-19]Status: DisposedITAT Bangalore10 Mar 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.S.N.Shyanbhog, AdvocateFor Respondent: Sri.Narayana K.R., Addl.CIT-DR
Section 139(1)Section 143(1)Section 36Section 36(1)(a)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Mangilal Padamchand, Mysore vs. The Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 25/BANG/2022[2018-19]Status: DisposedITAT Bangalore08 Mar 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Harish, ARFor Respondent: Sri.Narayana K.R., Addl.CIT-DR
Section 139(1)Section 143(1)Section 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Pr Commissioner of Income Tax vs. M/S Samarpan Synthetics Pvt Ltd

Accordingly, the learned appellate authority has rightly dismissed the

ITA/17/2021HC Rajasthan04 Mar 2022

Bench: AKIL KURESHI,REKHA BORANA

Section 107

…v. Bank of Bihar, AIR 1967 SC 389. Merely describing a provision as an “Explanation” or a “clarification” is not decisive of its true meaning and import. On this aspect, this Court in Virtual Soft Systems Ltd. v. Commissioner of Income Tax, Delhi, (2007) 289 ITR 83 (SC) observed as under : “Even if the statute does contain a statement to the effect that the amendment is declaratory or clarificatory, that is not the end of the matter. The Court will not regard itself as being bound by the said statement in the statute itself, but will proceed to analyse the nature of the amendment and then conc…

Deputy Commissioner of Income Tax, Circle 2(1), Jabalpur vs. Madhya Pradesh Power Generating Co. Ltd., Jabalpur

In the result, the Revenue's appeal is dismissed as not maintainable

ITA 251/JAB/2018[2008-09]Status: DisposedITAT Jabalpur23 Feb 2022AY 2008-09

Bench: Shri Sanjay Arora, Hon’Ble & Shri Manomohan Das, Hon'Ble

For Appellant: Shri Rahul Bardia, CAFor Respondent: Shri S.K. Halder, DR
Section 115Section 143(3)Section 147Section 154Section 271(1)(c)

…ts amendment by Finance Act, 2002 (w.e.f. 01.4.2003), not attracted where the income returned and assessed is in the negative. The Apex Court, in further appeal by the Revenue, which was admitted despite the decision in Virtual Soft Systems Ltd. v. CIT [2007] 289 ITR 83 (SC) being against it, overruling the said decision, clarified that Expl. 4 provided for the levy of penalty even where no tax is payable. The amendment thereto by Finance Act, 2002 was clarificatory in nature, so that penalty under section 271(1)(c) would get attracted in such a case even prior to 1.4.2003. Explanation 4(a), it explained, was ins…

Telecomone Teleservices India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeals filed by the assessee are allowed

ITA 695/BANG/2021[2018-19]Status: DisposedITAT Bangalore02 Feb 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Cherian K.Baby, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Telecomone Teleservices India Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeals filed by the assessee are allowed

ITA 694/BANG/2021[2017-18]Status: DisposedITAT Bangalore02 Feb 2022AY 2017-18

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Cherian K.Baby, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Sri. Shamanna Nagamma Balasubramany, Bangalore vs. Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 682/BANG/2021[2018-19]Status: DisposedITAT Bangalore01 Feb 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Ramasubramaniyan, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Technocon Constructions & Infrastructure Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(1) Represented by Assistant Director of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 670/BANG/2021[2019-20]Status: DisposedITAT Bangalore01 Feb 2022AY 2019-20

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Rajgopal, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 250Section 3Section 30Section 32Section 36Section 36(1)(va)Section 438Section 43B

…of the Act for concealment of income 7 M/s.Technocon Constructions & Infrastructure Pvt.Ltd. where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Sri. P Anand Vardhan Reddy, Bengaluru vs. Assistant Director of Income Tax, CPC, Bengaluru

In the result, the appeal filed by the assessee is allowed

ITA 663/BANG/2021[2018-19]Status: DisposedITAT Bangalore31 Jan 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.S.Annamalai, AdvocateFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 234ASection 250Section 36Section 36(1)(va)Section 43E

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Venkara Reddy Pramod Reddy, Tumkuru vs. Deputy Commissioner of Income Tax, CPC, Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 659/BANG/2021[2018-19]Status: DisposedITAT Bangalore31 Jan 2022AY 2018-19

Bench: Shri George George K, Jm & Ms.Padmavathy S, Am

For Appellant: Sri.Sandeep Chalapathy, CAFor Respondent: Sri.Gopinath C.H., CIT-DR
Section 139(1)Section 143(1)Section 143(1)(a)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

The Secunderbad Club, Hyderabad vs. ITO Ward -10(2), Hyderabad

Appeal is dismissed in above terms

ITA 166/HYD/2021[2016-17]Status: DisposedITAT Hyderabad27 Jan 2022AY 2016-17

Bench: Shri S.S.Godara & Shri Laxmi Prasad Sahu

For Appellant: Shri S.Rama Rao, ARFor Respondent: Shri L.Jeevanlal, DR
Section 143(3)

…to include losses. The expression 'profits and gains' refers to positive income whereas losses represent negative profit or in other words mm::;s income. This aspect does not appear to have been noticed by the Bench in Virtual Soft Systems Ltd. 's case [2007] 289 ITR 83 (SC); [2007] 9 SCC 665. Reference to the order by this court dismissing the Revenue's Civil Appeal No. 7961 of 1996 in CIT v. Prithipal Singh and Co. [20011 249 ITR 670 (SC) is also not very important because that was in relation to the assessment year 1970-71 when Explanation 4 to section 271(1)(c) was not in existence. The view of this court in…

Mr. Yeruva Prasad, Bengaluru vs. The Assistant Commissioner of Income Tax, CPC, Bengaluru

In the result, the appeals filed by the assessee are allowed

ITA 589/BANG/2021[2019-20]Status: DisposedITAT Bangalore22 Dec 2021AY 2019-20

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: Sri.Kusuma Yatish, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Mr. Yeruva Prasad, Bengaluru vs. The Assistant Commissioner of Income Tax, CPC, Bengaluru

In the result, the appeals filed by the assessee are allowed

ITA 588/BANG/2021[2018-19]Status: DisposedITAT Bangalore22 Dec 2021AY 2018-19

Bench: Shri George George K, Jm & Shri B.R.Baskaran, Am

For Appellant: Sri.Kusuma Yatish, CAFor Respondent: Smt.Priyadarshini Besaganni, JCIT-DR
Section 139(1)Section 143(1)Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Maheshwari Woods Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, CPC, Bengaluru

In the result, the appeals filed by the assessee are allowed

ITA 586/BANG/2021[2019-20]Status: DisposedITAT Bangalore21 Dec 2021AY 2019-20

Bench: Shri Chandra Poojari, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.H.Ganpatlal Kawad, CAFor Respondent: Sri.Sankar Ganesh K, JCIT-DR
Section 139(1)Section 143(1)Section 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Maheshwari Woods Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, CPC, Bengaluru

In the result, the appeals filed by the assessee are allowed

ITA 585/BANG/2021[2018-19]Status: DisposedITAT Bangalore21 Dec 2021AY 2018-19

Bench: Shri Chandra Poojari, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.H.Ganpatlal Kawad, CAFor Respondent: Sri.Sankar Ganesh K, JCIT-DR
Section 139(1)Section 143(1)Section 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Sri. P. Purandhara Reddy, Bengaluru vs. The Assistant Commissioner of Income Tax, Central Circle-2(4), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 569/BANG/2021[2018-19]Status: DisposedITAT Bangalore20 Dec 2021AY 2018-19

Bench: Shri Chandra Poojari, Am & Smt.Beena Pillai, Jm

For Appellant: Smt.Sunaina Bhatia, CAFor Respondent: Capt.Pradeep Shoury ARya, Addl.CIT-DR
Section 139(1)Section 143(1)Section 36Section 36(1)(va)Section 43B

…y can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex 6 Sri P Purandhara Reddy Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…

Srinivas Achar Mohankumar, Bangalore vs. Income Tax Officer, Ward-4(3)(4), Bengaluru

In the result, the appeal filed by the assessee is allowed

ITA 568/BANG/2021[2018-2019]Status: DisposedITAT Bangalore16 Dec 2021AY 2018-2019

Bench: Shri N.V.Vasudevan, Vice- & Shri Chandra Poojari, Am

For Appellant: Sri.Mahesh Reddy, CAFor Respondent: Sri.Sankar Ganesh K, Joint CIT-DR
Section 139(1)Section 143(1)Section 234ASection 234CSection 36Section 36(1)(va)Section 43B

…question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sine-quo-non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the m…