Punjab-Haryana High Court
Commissioner Of Income-Tax vs Tek Ram (Huf) on 4 February, 2008
Equivalent citations: [2008]300ITR354(P&H)
Author: Rakesh Kumar Garg
Bench: Satish Kumar Mittal, Rakesh Kumar Garg
JUDGMENT Rakesh Kumar Garg, J.
1. The Revenue has filed the present appeal against the order dated April 19, 2007, passed by the Income-tax Appellate Tribunal, Delhi Bench "H", New Delhi, in I.T.A. No. 328/Delhi of 2006 in the case of the respondent/assessee for the assessment year 1998-99 raising the following substantial questions of law:
(i) Whether the hon'ble Income-tax Appellate Tribunal was right in law in deleting the penalty levied under Section 271(1)(c) of the Income-tax Act, 1961, whereas it had already confirmed the addition made under Section 45(5) of the Income-tax Act on account of enhanced compensation received during the previous year relating to the assessment year 1998-99?
(ii) Whether, on the facts and circumstances of the case, the hon'ble Income-tax Appellate Tribunal was right in holding that the view of the assessee regarding non-taxability of enhanced compensation was bona fide particularly in view of the provisions of Section 45(5) of the Income-tax Act?
2. The brief facts giving rise to this appeal are as under:
(i) The respondent-assessee filed a return declaring income of Rs. 30,760 on March 30, 1999, in the status of individual. The assessee though mentioned enhanced compensation received at Rs. 7,68,172.75 and interest on enhanced compensation at Rs. 4,351 in the computation sheet but did not offer the same for tax. The assessment was completed under Section 143(3) of the Income-tax Act in the status of a Hindu undivided family by the Income-tax Officer, Ward-8, Faridabad, vide order dated January 31, 2001, at an income of Rs. 3,19,767. This order was later on set aside by the Commissioner of Income-tax (Appeals) vide consolidated order for the assessment years 1996-97, 1997-98 and 1998-99 dated April 20, 2001. Thereafter, the assessment was framed again vide assessment order dated January 21, 2003, and it was held that enhanced compensation and interest on the enhanced compensation is taxable. Vide his order penalty proceedings under Section 271(1)(c) were also to be initiated separately.
3. The Income-tax Officer, Ward-1(3), Faridabad, vide his order dated March 29, 2005, held that he is satisfied that the assessee has concealed the particulars of his income amounting to Rs. 10,57,180 for the assessment year 1998-99 and, therefore, the assessee is liable to pay penalty under Section 271(1)(c) of the Income-tax Act, 1961, equal to 100 per cent. of tax sought to be evaded.
4. The appeal filed by the assessee against the order of the penalty proceedings was accepted by the Commissioner of Income-tax (Appeals), Faridabad, vide his order dated November 25, 2005.
While allowing the appeal, the Commissioner of Income-tax (Appeals) held that the taxability of the enhanced compensation and interest thereon is the matter of litigation and the issue has not been finally settled and therefore, there was a bona fide belief on the part of the appellant that this income could not be subjected to tax and under these circumstances, no penalty under Section 271(1)(c) could be imposed.
The appeal filed by the Revenue before the Tribunal against the order of the Commissioner of Income-tax (Appeals) was also dismissed on April 19, 2007.
5. Mr. Yogesh Putney, advocate, learned Counsel for the Revenue/appellant, has vehemently argued that the enhanced compensation and interest on enhanced compensation are taxable on receipt basis and the same was not deliberately offered to tax by the assessee, though the same was taxable and had the return, was accepted as correct income, the Revenue would have suffered loss on account of tax and, therefore, the explanation offered by the assessee in respect of the facts material to the computation of total income have been found to be false and, therefore, the penalty under Section 271(1)(c) has been rightly imposed.
6. Learned Counsel for the Revenue has been heard and record perused.
We find that the arguments raised by counsel for the Revenue are without any merit and no substantial question of law arises from the order of the Tribunal. The Tribunal has given a finding of fact to the effect that the amount of enhanced compensation and interest on such enhanced compensation received by the assessee were taxable in the hands of the assessee for the year under consideration on receipt basis when the matter relating to the enhanced compensation was still in dispute was a highly debatable issue inasmuch as two views were clearly possible on the said issue as is apparent from the decisions of the various High Courts as well as of the hon'ble Supreme Court of India and the claim of the assessee was on this issue thus was based on one possible view and although the said claim was not accepted in the quantum proceedings on a difference of opinion, we are of the view that making of such claim bona fide on the basis of a possible view could not be treated as concealment of its income by the assessee or furnishing of inaccurate particulars of such income so as to attract the penal provisions of Section 271(1)(c) of the Income-tax Act. The said finding of fact has been given by the Tribunal after perusing the relevant material on record and the orders of the lower authorities and there is no such material to show that the assessee has filed inaccurate particulars in the return of income. Thus, no question of law arises in the present appeal and the same is dismissed.