2008 (2) TMI 320 - HC - Income Tax

Interest income on the enhanced compensation was not declared by the assessee non-furnishing the particulars of income - penalty u/s 271 - ITAT was right upholding the decision of CIT of cancellation of assessment made by the Assessing Officer and in deleting the penalty on ground that proving contumacious intent is an essential ingredient in levy of penalty revenue appeal dismissed

Summary

Issues:
1. Appeal against order of Income Tax Appellate Tribunal
2. Substantial questions of law raised by the appellant-revenue
3. Assessment year 1995-96
4. Penalty proceedings under Section 271(1)(c)
5. Concealment of income and penalty imposition
6. Appeal against penalty imposition
7. Dismissal of appeal by Income Tax Appellate Tribunal

Analysis:

1. The appeal in question was filed by the revenue against the order dated 18.4.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench 'G' Delhi for the assessment year 1995-96. The substantial questions of law raised by the appellant-revenue pertained to the confirmation of penalties levied under Section 271(1)(c) by the Assessing Officer. The appellant contended that the ITAT erred in confirming the order of the CIT(A) which deleted the penalties, despite the initiation of penalty proceedings by the Assessing Officer.

2. The facts leading to the appeal involved an agriculturist whose land was acquired by Haryana Urban Development Authority (HUDA), resulting in compensation awarded to the assessee. The assessee received interest on enhanced compensation for the relevant assessment years but failed to declare it in the return of income. Consequently, penalty proceedings under Section 271(1)(c) were initiated, and the Assessing Officer imposed a penalty for concealing income. The CIT(A) cancelled the penalty, leading to an appeal by the revenue before the ITAT.

3. The ITAT upheld the findings of the Assessing Officer and confirmed the addition of interest on enhanced compensation, leading to the initiation of penalty proceedings. The penalty was imposed by the Income Tax Officer, which was later cancelled by the Commissioner of Income Tax (Appeals). Subsequently, the revenue filed an appeal before the ITAT, which dismissed the appeal against the cancellation of penalty.

4. The counsel for the revenue acknowledged similar judgments by the Court, leading to the conclusion that the order of the ITAT did not have any legal flaws, and no substantial question of law arose in the present appeal. As a result, the Court dismissed the appeal in limine, affirming the decision of the ITAT.

This detailed analysis highlights the legal proceedings, issues raised, and the final decision of the Court regarding the penalty imposition and subsequent appeals in the case.