C I T vs. MUNIM

The present appeal has been filed by the revenue against the order dated 18.4.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench 'G' Delhi in ITA No.02(Del)2006 in the case of respondent-assessee for the assessment year 1995-96 raising the following substantial questions of law:-. “ 1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in confirming the order of the Ld. CIT(A) who deleted the penalties levied by Assessing Officer u/s 271(1)(c ) in contravention of the order of the Hon'ble Madras High Court in the case penalty proceedings u/s 271(1)(c) in the assessment order ?

That the Hon'ble ITAT erred in deciding that proving contumacious intent is an essential ingredient in levy of penalty in contravenetion of the provisions of a Civil Statute like Income Tax Act in spite of there being so many judgements that breach of a Civil obligation attracts levy of penalty whether the contravention was made by the defaulter with any guilty intention or not?

That the order of the Hon'ble ITAT is in contravention Income Tax 210 CTR 287 (Mad)?”

Brief facts giving rise to this appeal are as under:- (i) The respondent-assessee is an agriculturist whose agricultural land was acquired by the Haryana Urban Development Authority (HUDA) and the assessee was awarded compensation in lieu of that by the Land Acquisition Officer. Not satisfied with the rate of compensation, the assessee filed the reference application under Section 18 of the Land Acquisition Act before the Additional District Judge, Faridbad who enhanced the compensation and also ordered HUDA to pay interest on enhanced compensation. (ii) The respondent-assessee received a total amount of Rs.48,49,323/- which includes interest on enhanced compensation at Rs.20,02,276/- for the period relevant to the assessment years 1994-95 to 1996-97. The assessee received interest for the assessment year 1995-96 which worked out to Rs.3,33,710/- but no return of income was filed, therefore, proceedings under Sections 147/148 were initiated of the Income Tax Act. (iii) In response to notice under Section 148, the assessee did not file his return of income. The interest income of Rs.3,33,710/- on the enhanced compensation for the year under consideration was not declared by the assessee which worked out to Rs.3,33,710/-. Therefore, the interest income of Rs.3,33,710/- was assessed to tax as assessee's income from interest on enhanced compensation and penalty proceedings u/s 271(1(c ) of the Act were initiated. The assessee went in appeal before the CIT(A) against the order of the Assessing Officer, who in turn, cancelled the assessment made by the Assessing Officer and directed him to make the assessment afresh. Aggrieved against this order of the CIT (A), the Department preferred an appeal before the Tribunal. The Tribunal upheld the findings of the Assessing Officer and confirmed the addition of Rs.3,33,710/- on account of interest on enhanced compensation.

Since the ITAT had upheld the findings of the Assessing Officer and had confirmed addition of Rs.3,33,701/- on account of interest on enhanced compensation, a show cause notice dated 13.1.2005 was issued to the asseessee fixing the penalty proceedings for hearing on 10.2.2005. None appeared on behalf of the respondent-assessee on the fixed date. The Income Tax Officer, Ward-I(3), Faridabad vide his order dated 28.2.2005 held that he is satisfied that the assessee has not furnished the particulars of his income and thereby has concealed his income. Accordingly, penalty under Section 271(1)(c ) was imposed as under:- “Tax on returned income Rs. Nil Tax on income sought to be evaded Rs.1,08,484/- Minimum Penalty u/s 271(1)(c )@100% Rs.1,08,484/- I hereby impose a minimum penalty of Rs.10,84,484/- equal to 100% of the tax sought to be evaded.”

The appeal filed by the assessee against the order of penalty imposed by the ITO, Ward-1(3), Faridabad, was accepted by the Commissioner of Income Tax (Appeals), Faridabad vide his order dated

2005. The revenue filed an appeal before the Income Tax Appellate Tribunal (Delhi Bench “G” New Delhi) against the order of the Commissioner of Income Tax (Appeals) dated 17.10.2005 whereby he cancelled the penalty imposed by the Assessing Officer under Section 271 (1)(c ) of the Act. The said appeal of the revenue was dismissed by the Tribunal.

Mr. Yogesh Putney, counsel for the revenue, has very fairly stated that Income Tax Appeal Nos.582 and 586 of 2007 involving similar questions of law and facts have already been dismissed by this Court vide judgement dated 5.2.2008 and 7.2.2008 respectively.

In view of the above, we are of the view that the order of the Tribunal does not suffer from any illegality and no substantial question of law arises in the present appeal and the same is dismissed in limine. (RAKESH KUMAR GARG) JUDGE February 11, 2008 (SATISH KUMAR MITTAL) ps