CIT vs. Nalwa Sons Investment Ltd (Supreme Court) Explanation 4 to section 271(1)(c) of the Income-tax Act, 1961 provides for levy of penalty even in a situation which has the effect of reducing the loss declared in the return or converting that loss into income. The Apex Court in the ruling of Gold Coin Health Food (P.) Ltd. [2008] 304 ITR 308 (SC) had laid laid down the rationale that ‘the tax sought to be evaded’ will mean the tax chargeable not as if it was the total income.