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TMI Blog2008 (2) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... the court was delivered by Rakesh Kumar Garg, J- 1. The Revenue has filed the present appeal against the order dated 12.12.2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'H' New Delhi in ITA No.793/Del/2006 in the case of respondent/assessee for the Assessment Year 1998-99 raising the following substantial questions of law:- ("i) Whether the Hon'ble ITAT was right in law in deleting the penalty levied u/s 271(1)(c) of Income Tax Act,1961 whereas it had already confirmed the addition made u/s 45(5) of the Income Tax Act on account of enhanced compensation received during the previous year relating to Assessment Year 1998-99? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing amount by the Land Acquisition Collector:- Enhanced compensation: Rs.27,62,344 Interest on enhanced compensation: Rs.12,66,298 4. The assessee relied upon a judgment of the Hon'ble Supreme Court of India cited as Commissioner of Income Tax Vs. Hindustan Housing Land Development Trust Ltd. [1986] 161 ITR 524(SC). The Hon'ble Supreme Court in the said judgment has held that right to receive the compensation would accrue only after final determination by the Court and the decision was rendered in the context of deciding the issue on accrual of compensation. However, the Assessing Officer completed the assessment under section 143(3) on 8.1.2001 and accordingly capital gain on enhanced com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equal to 100% of tax sought to be evaded. The appeal filed by the assessee against the order of penalty was accepted by the Commissioner of Income Tax (Appeals), Faridabad vide order dated 4.1.2006. The relevant part of the order of the Commissioner of Income Tax is reproduced below:- "7.3. I have considered the issue, the appellant had disclosed all the particulars of his income by appending a note and placing a bona fide reliance on the decision of the Hon'ble Supreme Court in the case of CIT Vs. Hindustan Housing Land Development Trust Ltd. [1986] 161 ITR 524, Moreover, there is an ongoing litigation on the issue of taxability of enhanced compensation and interest thereon whether it will be taxed on the actual receipt basis or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the particulars of income, the status of the assessee is in dispute, the Hon'ble Jurisdictional High Court has held that interest on enhanced compensation is taxable on accrual basis, the stand taken by the AO that it is taxable on receipt basis clearly brings about the ambiguity in the law. Moreover, the assessee was in a bonafide belief that it is not taxable on actual receipt basis by placing reliance on the decision of the Supreme Court. Since, both the elements of bona fide belief and ambiguity in law are present in this case; the penalty u/s 271(1)(c ) is not justified. Hence, the action of AO can not be upheld." 7. The revenue filed the appeal before the Income Tax Appellate Tribunal, Delhi Bench, New Delhi against the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder canceling the penalty imposed by the AO u/s 271(1)(c) is, therefore, upheld and this appeal preferred by the Revenue is dismissed." 8. Mr. Sanjeev Bansal, Advocate, learned counsel for the Revenue/appellant has strenuously 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, 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 righ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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