IMPORTANT POINT
Penalty would be leviable even if no tax was payable.

Headnote:(a) Judicial Review – Speaking order – Brevity is an art but brevity without clarity is likely to enter into the realm of absurdity, which is impermissible – Guidelines for writing orders and judgments reiterated. (Paras 5 and 7)
        (b) Income Tax Act, 1961 – Section 271 (1) (c) – Penalty would be leviable even if no tax was payable. (Paras 24 and 30)
        (2008) 304 ITR 308 (SC) – Relied upon
        (2007) 289 ITR 83 (SC) – Overruled
        (c) Income Tax Act, 1961 – Section 2(24) – Income – Income includes losses, that is, negative profit. (Para 27)
        (1975) 99 ITR 118; (1979) 120 ITR 921 – Relied upon
        XL ITR 142 – Distinguished
       Facts of the case:
        In this appeal the question whether penalty is leviable even if the income is NIL, has been raised.
       Finding of the Court:
        Penalty would be leviable even if no tax was payable.

JUDGMENT

Deepak Verma, J. —

1. Leave granted.

2. The facts of both the appeals being identical, the facts of civil appeal arising out of S.L.P.(C) No.5241 of 2007 are being referred to in this judgment.

3. On a first flush, after bare perusal of the impugned order passed in Revenue Tax Appeal No. 1904 of 2005, decided on 8.8.2006 by Division Bench of the High Court of Gujarat at Ahmedabad, we thought of remanding the matter for a fresh decision on merits, in accordance with law but, on a deeper and studied scrutiny, we thought it apt instead of directing to remit, it would be just and proper to consider the matter on merits ourselves and to set at rest the legal controversy involved in the appeal. It is further so that Division Bench in the impugned order has decided the question of law as projected before it in the appeal preferred under Section 260 (A) of the Income Tax Act, 1961, (hereinafter referred to as ‘the Act’) in a most casual manner. The order is not only cryptic but does not even remotely deal with the arguments which were sought to be projected by the Revenue before it.

4. This Court, time and again, reminded the courts performing judicial functions, the manner in which judgments/orders are to be written but, it is, indeed, unfortunate that those guidelines issued from time to time are not being adhered to.

5. No doubt, it is true that brevity is an art but brevity without clarity likely to enter into the realm of absurdity, which is impermissible. This is what has been reflected in the impugned order which we would reproduce hereinafter.

6. We, therefore, before proceeding to decide the matter on merits, once again would like to reiterate few guidelines for the Courts, while writing orders and judgments to follow the same.

7. These guidelines are only illustrative in nature, not exhaustive and can further be elaborated looking to the need and requirement of a given case:-

a) It should always be kept in mind that nothing should be written in the judgment/order, which may not be germane to the facts of the case; It should have a co-relation with the applicable law and facts. The ratio decidendi should be clearly spelt out from the judgment / order.

b) After preparing the draft, it is necessary to go through the same to find out, if anything, essential to be mentioned, has escaped discussion.

c) The ultimate finished judgment/order should have sustained chronology, regard being had to the concept that it has readable, continued interest and one does not feel like parting or leaving it in the midway. To elaborate, it should have flow and perfect sequence of events, which would continue to generate interest in the reader.

d) Appropriate care should be taken not to load it with all legal knowledge on the subject as citation of too many judgments creates more confusion rather than clarity. The foremost requirement is that leading judgments should be mentioned and the evolution that has taken place ever since the same were pronounced and thereafter, latest judgment, in which all previous judgments have been considered, should be mentioned. While writing judgment, psychology of the reader has also to be borne in mind, for the perception on that score is imperative.

e) Language should not be rhetoric and should not reflect a contrived effort on the part of the author.

f) After arguments are concluded, an endeavour should be made to pronounce the judgment at the earliest and in any case not beyond a period of three months. Keeping it pending for long time, sends a wrong signal to the litigants and the society.

g) It should be avoided to give instances, which are likely to cause public agitation or to a particular society. Nothing should be reflected in the same which may hurt the feelings or emotions of any individual or society.

8. Aforesaid are some of the guidelines which are required to be kept in mind while writing judgments. In fact, we are only reiterating what has already been said in several judgments of this Court.

9. A