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3. Shri K.H. Kaji, senior advocate appeared in the case of Apsara Processors vide ITA No. 284/Ahd/2004 and Khedkar Brothers Trading Co. (P) Ltd. vide ITA No. 251/Ahd/2002. He argued at length. His arguments can be summarised as under : That Section 271(1)(c) provides for levy of penalty for concealment of particulars of income or for furnishing inaccurate particulars of such income. Now, Sub-clause (iii) provides for levy of penalty in addition to any tax payable by the assessee. Thus, penalty Under Section 271(1)(c) is leviable only when some tax is payable by the assessee because levy of penalty is in addition to the tax payable by the assessee. Sub-clause (iii) of Section 271(1)(c) has been amended by Finance Act, 2002 w.e.f. 1st April, 2003, and by the amendment the words "in addition to tax payable" have been replaced by the words "in addition to tax, if any, payable by the assessee". Thus, before the amendment, the penalty could have been levied only if some tax was payable. Once the penalty is leviable then the computation provision comes into play and for computing the penalty, Expln. 4 can be resorted to. However, if no tax is payable, then penalty provision is inapplicable and the question of invoking Expln. 4 does not arise. In other words, the Expln. 4 had no meaning and was ineffective till Sub-clause (iii) is amended by the Finance Act, 2002. The learned counsel further submitted that the amendment made by Finance Act, 2002, is w.e.f. 1st April, 2003, and it cannot be considered for the purpose of the appeal under consideration before the Special Bench because in all the appeals, the assessment years are prior to asst. yr. 2003-04. The learned counsel further submitted that the issue under consideration is covered in favour of the assessee by the decision of Punjab & Haryana High Court in the case of CTT v. Prithipal Singh (1990) 183 ITR 69 (P&H) which is affirmed by the Hon'ble apex Court in CIT v. Prithipal Singh & Co. (2001) 249 ITR 670 (SC). The decision of the Punjab & Haryana High Court has merged with the decision of Hon'ble apex Court and now the matter stands concluded by the above decision of the apex Court.

The Revenue carried the matter before the Hon'ble apex Court. The Hon'ble apex Court in CIT v. Prithipal Singh & Co. (supra) dismissed the Revenue's appeal by the following order;

"We have heard learned counsel and find that, on the facts of this case, no interference is called for."

15. On behalf of the assessee, it has been vehemently contended that now the issue is set at rest by the above decision of Hon'ble apex Court that the penalty Under Section 271(1)(c) cannot be levied where the assessed income is loss prior to amendment by Finance Act, 2002. However, it was contended on behalf of the Revenue that the above decision in the case of Prithipal Singh was with regard to law applicable in asst. yr. 1970-71 and would not be applicable after the amendment by the Taxation Laws (Amendment) Act, 1975 which modified the Explanation w.e.f. 1st April, 1976.

".....The distinction sought to be drawn by the learned Departmental Representative on the premises that Prithipal Singh's case relates to asst. yr. 1970-71 i.e. prior to introduction of Expln. 4, is in our opinion entirely misconceived. The Hon'ble Supreme Court has endorsed the view of the Hon'ble Punjab & Haryana High Court in Prithipal Singh & Co. (P) Ltd.'s case wherein it has been held that:
(i) the word "income" in Clauses (c) and (iii) of Section 271(1)(c) of the IT Act, 1961 refers to the positive income only.
(ii) Evasion of tax is the sine qua non for imposition of penalty for concealment Under Section 271(1)(c).
(iii) Explanation 4 annexed to Section 271(1)(c), presupposes taxable income with regard to the assessment year in question. If there is no payment during a particular year, the question of evasion and consequently penalty does not arise.

The aforesaid proposition by the Hon'ble Punjab & Haryana High Court in Prithipal Singh & Co.'s case (supra) constitutes the ratio decidenci of the judgment which has been endorsed and approved by the Hon'ble Supreme Court. We are unable to appreciate the attempt made by the Revenue to distinguish Prithipal Singh & Co.'s case on the ground that it relates to asst. yr. 1970-71, i.e., prior to insertion of Expln. 4, since Expln. 4 has been specifically considered and discussed by the Hon'ble Punjab and Haryana High Court while laying down the propositions extracted hereinbefore by us and the decision has been approved and endorsed by the Hon'ble Supreme Court. It goes without saying that by virtue of the constitutional mandate enshrined in Art. 141 of the constitution, the law declared by the Supreme Court is. binding on all Courts and Tribunals within the territorial jurisdiction......"