- (1.) This appeal has been preferred by the asses-see under section 260A of the Income-tax Act, 1961 (in short ''the Act''), against the order dated March 28, 2007, passed by the Income-tax Appellate Tribunal, Delhi Bench, New Delhi (hereinafter referred to as ''the Tribunal'') in ITA No. 31/D/2004, relating to the assessment year 1999-2000, claiming the following substantial questions of law : (i) Whether, in the facts and circumstances of the case, when deduction itself was disputed that in which year the deduction was allowable the penalty under section 271(1)(c) could be levied and upheld ? (ii) Whether, in the facts and circumstances of the case, penalty can be imposed for claiming the deduction in the assessment year 1999-2000 when the Department itself was of the view that the deduction is not allowable in the assessment year 1998-99 ?
(2.) The facts, in brief, necessary for disposal of the appeal are that the asses-see is a manufacturer of auto parts and supplier to Maruti Udyog Ltd. It filed its return of income for the assessment year 1998-99 on October 29, 1998, declaring an income of Rs. 1,46,140. The said return was revised on October 21, 1999, declaring loss of Rs. 8,53,860 on account of receipt of debit notes amounting to Rs. 10 lakhs from Maruti Udyog Ltd. The assessment order was passed on March 27, 2001, accepting the loss of Rs. 6,35,767 after allowing the claim of Rs. 10 lakhs. The assessee for the year 1999-2000 filed its return of income on December 16, 1999, declaring a net loss of Rs. 5,94,541. Here, the assessee had again claimed loss amounting to Rs. 10 lakhs on account of debit note received from Maruti Udyog Ltd. The assessment was completed by the Assessing Officer on March 21, 2002, disallowing the loss of Rs. 10 lakhs on the ground that the assessee had already availed of the said loss in the assessment year 1998-99. The Assessing Officer also imposed penalty of Rs. 3,50,000 upon the assessee under section 271(1)(c) of the Act, vide order dated September 24, 2002, for concealment of income and furnishing inaccurate particulars. The assessee filed an appeal before the Commissioner of Income-tax (Appeals) (in short ''the CIT(A))'' against the levy of penalty by the Assessing Officer. In the meantime, the Commissioner of Income-tax (CIT), vide order dated December 26, 2002, initiated proceedings under section 263 of the Act for the assessment year 1998-99 on the ground that the loss of Rs. 10 lakhs had been wrongly allowed as the same was not written off in the books of account for the said year. The Commissioner of Income-tax (Appeals), vide order dated November 20, 2003, dismissed the appeal of the assessee against levy of penalty. Feeling aggrieved, the assessee filed appeals against the orders dated November 20, 2003, and December 26, 2002, before the Tribunal. The Revenue also filed an appeal against the order of the Commissioner of Income-tax (Appeals) deleting the addition of Rs. 10 lakhs made by the Assessing Officer in the consequential proceedings taken in pursuance of the order of the Commissioner of Income-tax dated December 26, 2002, under section 263 of the Act. The Tribunal, vide order dated March 25, 2007, allowed the appeal of the assessee and set aside the order of the Commissioner of Income-tax passed under section 263 of the Act and restored that of the Assessing Officer dated March 27, 2001, allowing deduction of Rs. 10 lakhs from income relating to the assessment year 1998-99. The appeal of the Revenue against the order deleting the addition was dismissed as the order under section 263 of the Act was set aside and it was held that the consequential proceedings thereto have become infructuous. However, the order imposing penalty under section 271(1)(c) of the Act was upheld by the Tribunal. Hence, the present appeal by the assessee.
(3.) We have heard learned counsel for the parties.;