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Issues involved: Appeal against Tribunal's order imposing penalty u/s 271(1)(c) of the IT Act for assessment year 2000-01 based on admission of income from service charges under house property, challenge of Tribunal's order on merits for earlier years, and whether penalty was rightly dropped by CIT(A) and confirmed by Tribunal.
Summary: The appellant, a partnership firm engaged in civil engineering contracts and hotel business, admitted income from service charges under house property for the assessment year 2000-01. The penalty u/s 271(1)(c) was imposed by the AO, which was challenged by the assessee before the CIT(A). The CIT(A) dropped the penalty proceedings citing the assessee's bona fide belief that the service charges should not be taxed as income from house property, as evidenced by the reference application filed before the High Court. The Tribunal upheld the CIT(A)'s decision, leading to the present appeal by the Revenue. The Revenue contended that the assessee failed to inform the authorities about the disposal of the reference application against the Tribunal's decision. However, it was found that the assessee had provided all relevant particulars regarding the service charges and had cooperated with the Department post the Tribunal and High Court orders. The CIT(A) concluded that there was no deliberate attempt to conceal income, and the reason offered by the assessee was acceptable. Considering the factual findings and the decisions of the statutory authorities and the Tribunal, the High Court dismissed the tax case appeal, referencing the Supreme Court judgment in T. Ashok Pai vs. CIT (2007) 210 CTR (SC) 259: (2007) 292 ITR 11(SC). No costs were awarded in this matter.
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