Judgment ( 1. ) THIS reference has been made by the Income Tax Appellate Tribunal, delhi Bench to answer the following question :-"whether on the facts and in the circumstances of the case, the honble Tribunal is justified in law in holding that penalty under section 271 (1) (c) is not leviable in the case where no positive income has been assessed ?" ( 2. ) BRIEF facts of the case are that the respondent-Company is a Private limited Company. For the assessment year 1982-83, it filed return declaring net loss of Rs. 3,95,000. The Assessing Officer completed the assessment at net loss of Rs. 3,77,231. For Assessment Year 1983-84, it filed return declaring net loss of Rs. 11,65,020/ -. The A. O. completed the assessment at net loss of rs. 1,00,882/ -. Quantum appeal filed by assessee for Assessment Year 1983-84 was dismissed by the CIT (A ). Against the order of CIT (A), the assessee filed appeal before ITAT, however, at the time of hearing the learned Counsel for the appellant did not press the appeal and the same was dismissed. ( 3. ) THE A. O. levied penalty under Section 271 (1) (c) Rs. 7,250/- and rs. 2,23,000/- for Assessment Year 1982-1983 and 1983-84 respectively, on the ground that assessee concealed the particulars of income. In appeal, CIT (A), bhopal confirmed the penalty levied for both the years. Against which assessee has filed two appeals before ITAT in which the Tribunal held as under:-Heard the appeals and it was held that penalty imposed is paid in addition to the tax payable. Where there is no tax payable, the question of any penalty does not arise. In fact, evasion of tax is the sine qua non for imposition of penalty. Clause (iii), which deals with cases referred to in clause (c) under sub-section (1) of Section 271 of the Act, it clear provides therein that the penalty or further sum payable by a person would be in addition to any tax payable by him. Explanations 3 and 4 annexed to the said provision of law also presuppose taxable income and regard to the assessment year in question. If there is no taxable income or the assessed tax for payment during the particular year, the question of evasion and subsequently penalty do not arise. Explanations 3 and 4 annexed to the said provision of law also presuppose taxable income and regard to the assessment year in question. If there is no taxable income or the assessed tax for payment during the particular year, the question of evasion and subsequently penalty do not arise. The learned tribunal also placed reliance on a decision of Punjab and Haryana High Court in the case of CIT Vs. Prithvipal Singh and Company, 183 ITR 69, in which it was held that when there is loss penalty for concealment of income is not leviable because there cannot be any motive to conceal the income. Tribunal further held that since no contrary judgment of any other High Court is pointed out, therefore the above judgment is binding on us and, therefore, there is no question of tax penalty arises and no penalty under Section 271 (c) is leviable and, allowed the appeals filed by the assessee. Thereafter the Revenue filed an application for referring the aforesaid question to this High Court for its opinion and on the request of Revenue the aforesaid question has been referred to this High Court for its opinion. ( 4. ) WE have heard Shri R. D. Jain, learned Senior Advocate on the question referred to us and his submission is that in view of Explanation 4 of Section 271 (1) (c) which explains the expression "tax sought to be evaded" penalty is leviable even in case of loss. However, he could not point out any decision in support of his submission. ( 5. ) WE have perused the provisions of sub-section 271 (1) (c) (iii) of the Income Tax Act and Explanation 4, which is quoted herein below:- "[failure to furnish returns, comply with notices, concealment of income, etc. Section 271. However, he could not point out any decision in support of his submission. ( 5. ) WE have perused the provisions of sub-section 271 (1) (c) (iii) of the Income Tax Act and Explanation 4, which is quoted herein below:- "[failure to furnish returns, comply with notices, concealment of income, etc. Section 271. (1) "if the [assessing] Officer or the [***] [commissioner (appeals)] [or the Commissioner] in the course of any proceedings under this Act, is satisfied that any person- (a) [*******] (b) [*******] (c) has concealed the particulars of his income or furnished inaccurate particulars of [such income, or] (d) [*******] he may direct that such person shall pay by way of penalty :- (i) [*******] (ii)[*******] (iii) in the cases referred to in clause (c) (in addition to tax, if any, payable) by him, a sum which shall not be less than, but which shall not exceed (three times), the amount of tax sought to be evaded by reason of the concealment of particulars of his income (or fringe benefits) or the furnishing of inaccurate particulars of such income (or fringe benefits ). Explanation 4: For the purposes of clause (iii) of this sub-section, the expression "the amount of tax sought to be evaded"-[ (a) in any case where 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;] (b) in any case to which Explanation 3 applies, means the tax on the total income assessed; (c) in any other case, means the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished. ]" ( 6. ]" ( 6. ) IN view of the aforesaid provision, we are in full agreement with the decision of the Punjab and Haryana Court in the case of Prithvipal Singh and company (supra), that the penalty imposed is paid in addition to the tax payable and the evasion of tax is the sine qua non for imposition of penalty and in clause (iii) of clause (c) under sub-section (1) of Section 271 of the Income Tax Act, it is clearly provided that the penalty or further sum payable by a person would be in addition to any tax payable by him and Explanations 3 and 4 annexed to the said provision of law also presupposes taxable income with regard to the assessment year in question. If there is no taxable income or the assessed tax for payment during the particular year, the question of evasion and subsequently penalty do not arise. So far as the Explanation 4 is concerned, the same will apply where the amount of income in respect of which particulars have been concealed or inaccurate particulars have been furnished as the effect of reducing the loss declared in the return or converting that loss into income. ( 7. ) IN the case in hand, it is clear that in the enquiry no concealment of income was found and it was also not found that inaccurate particulars have been effected as declared in the return. Therefore, clearly the provision of explanation 4 will not provide any help to the Revenue. As per the provisions of section 271 (1) (c) that penalty imposed is paid in addition to the tax payable. When there is no tax payable, the question of any penalty does not arise. In fact, the evasion of the tax is the sine qua non for imposition of penalty. If the penalty or further sum payable by a person would be in addition to any tax payable by him. If losses are shown certainly no penalty can be imposed. The income under the provisions of law taxable is presupposes with regard to the assessment year herein question. If there is no taxable income or the assessed tax for payment during the particular year in any case it is cannot be presumed that it is the case of evasion of tax and penalty can be imposed. Penalty can only be imposed when there is concealment of the income. If there is no taxable income or the assessed tax for payment during the particular year in any case it is cannot be presumed that it is the case of evasion of tax and penalty can be imposed. Penalty can only be imposed when there is concealment of the income. If on enquiry losses were found justified, they cannot be reduced and the positive income cannot be assessed. The A. O. and the other authorities though have reduced the losses from Rs. 11,65,020/- to the tune of Rs. 1,00,882/- but there is no finding that the losses have been converted into the income or there is concealment of income. Therefore, in view of the aforesaid factual aspect of the matter the Explanation 4 will not be applicable in this case as has been argued by learned Counsel for Revenue. Therefore, we answer that the Tribunal was justified in holding that when total income is assessed at a loss and no tax leviable income is assessed or found that no tax is payable, no penalty under Section 271 (1) (c) is leviable and can be imposed. ( 8. ) THUS, the reference is accordingly answered.