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Issues involved:
The judgment involves the question of penalty imposed by the Assessing Officer u/s 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1996-97. Details of the judgment: The appeal was filed by the revenue against the order of the Income Tax Appeal Tribunal canceling the penalty of &8377; 4,85,399 imposed by the Assessing Officer u/s 271(1)(c). The Commissioner of Income Tax (Appeals) had earlier canceled the penalty. The tribunal observed that the issue of interest earned by the assessee on investments made in short term deposits with the bank before commencing business was debatable, with two possible views. The tribunal upheld the cancellation of penalty, stating that the assessee's claim was based on a possible view and not concealment of income. The tribunal noted that since two views were possible, no interference was required in the appeal. The High Court dismissed the appeal, stating that no substantial questions of law arose for consideration, despite the dismissal of the assessee's quantum appeal. This judgment highlights the importance of a bona fide claim based on a possible view in tax matters, and the significance of debatable issues in determining penalties u/s 271(1)(c) of the Income-tax Act, 1961.
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