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Issues:
Appeals against deletion of penalty under section 271(1)(c) for assessment years 1997-98 and 1998-99. Analysis: The appeals arose from a single order of the Commissioner of Income-tax (Appeals) regarding the deletion of penalties imposed by the Assessing Officer under section 271(1)(c) of the Income-tax Act, 1961. The Assessing Officer enhanced the income in both cases due to interest income not declared on accrual basis. The appellant, a Finance Company, had taken loans and granted further loans to companies with doubtful recovery prospects, leading to non-declaration of interest income. The Commissioner of Income-tax (Appeals) deleted the penalties, citing reasonable doubt in recovery, adherence to accounting standards, and proper disclosure in audited accounts. The department argued that accounting principles do not override tax statutes, emphasizing the requirement to show interest income on accrual basis. However, the appellant's explanation for not declaring income on accrual basis was supported by the financial situation of borrower companies and in line with accounting standards. The Tribunal held that the penalties were not justified as there was no deliberate concealment of income, and the appellant disclosed the relevant facts. The decision was supported by precedents and upheld the Commissioner's order. In conclusion, the Tribunal dismissed the revenue's appeals, upholding the Commissioner's decision to delete the penalties imposed by the Assessing Officer.
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