GIRISH CHANDRA GUPTA J. - (1.) The Revenue has come up in appeal u/s.260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') against the judgment and order dated 20th March, 2009 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') 'B' Bench, Kolkata in ITA No.1920 (Kol.) of 2008 for the assessment year 2005 -06. The questions of law suggested by the revenue for consideration are as follows: - "i) Whether, the mere disclosure of the amount of interest earned on the income -tax refund in the notes to accounts, without including the same in the computation of the total income, constituted bona fide belief of the assessee that such interest income was not exigible to tax on actual receipt of the said income? ii) Whether, the assessee in the instant case was justified in treating the interest received on income -tax refund as being contingent in nature, although there is no provision to that effect in the Income Tax Act 1961 and income is to be taxed either on accrual or receipt basis? iii) Whether, the assesse in the instant case has furnished inaccurate particulars of income considering the judicial view that interest received on refund of income tax is liable to be taxed in the year of receipt notwithstanding the fact that quantum appeals are pending before the appellate authority -
(2.) The facts and circumstances of the case briefly stated are as follows: - During the financial year 2004 -05 the assessee received interest amounting to Rs.101.45 lakhs with the amount of refund arising from orders passed by the Commissioner of Income Tax (Appeals) (hereinafter referred to as "CIT(A)") for the assessment years 1993 -94 to 1996 -97. The revenue appealed against the order of the CIT(A) before the Tribunal. Since the matter was subjudice the assessee did not include the income arising out of the aforesaid amount of interest in his profit and loss account but disclosed the same in the notes to the accounts. The assessment was done under Section 143(3) of the Act.
(3.) During the assessment proceedings the assessee was asked to justify the omission. In response the assessee furnished submissions dated 10th September 2007 wherein he stated that relevant disclosure regarding the interest income had been made under clause 5 of Schedule 'H' titled 'Accounting Policies and Notes on Accounts' by way of the following note: - "Based on the allowance of certain claims of CIT (Appeals), the Company has received interest of Rs.101.45 lacs from Income Tax Department for the assessment years 1993 -94 to 1996 -97. However, the department has gone into appeal against the above judgement and accordingly, the said interest income being a matter of contingency, has not been credited to the Profit and Loss Account." ;