AJAY KUMAR MITTAL, J. - (1.) THIS appeal under S. 260A of the IT Act, 1961 (for short "the Act") has been filed by the Revenue against the order dt. 31st March, 2010, passed by the Income-tax Appellate Tribunal Delhi Bench 'F', New Delhi (in short "the Tribunal") in ITA No. 4435/Del/2009, relating to the asst. yr. 1994-95.
(2.) THE following substantial questions of law have been claimed for determination by this Court : (1) Whether on the facts and in the circumstances of the case, the learned Tribunal was right in law in deleting the penalty of Rs. 6,30,930 levied by the AO, under S. 271(1)(c) of the IT Act, 1961, even though the assessee had failed to discharge the onus to explain satisfactorily inaccurate furnishing of income through wilful attempt of setting off of brought forward business losses against the capital gains of the current year by deliberate violation of the specific provisions of ss. 72 and 71(2) of the IT Act, 1961? (2) Whether on the facts and in the circumstances of the case, the learned Tribunal was right in law in deleting the penalty of Rs. 6,30,930 levied by the AO under S. 271(1)(c) of the IT Act, 1961 by holding that it was not a fit case for levy of penalty merely by declining assessee's claim for set off of business loss against other heads of income even though the penalty of leviable on contravention of the provisions of a civil statute, like IT Act and it is settled law that breach of a civil obligation attracts levy of penalty and is contrary to the decision of Hon'ble Supreme Court in the case of Union of India and Ors. vs. Dharmendra Textiles Processors and Ors. (2008) 219 CTR (SC) 617 : (2008) 14 DTR (SC) 114 : (2008) 306 ITR 277 (SC) ?" The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed its return for the assessment year in question, on 23rd Aug., 1994 declaring a loss of Rs. 2,51,500 and thereafter revised return on 30th Nov., 1995 declaring loss of Rs. 8,51,615. In the proceedings that were initiated under S. 143(3) of the Act, the AO under the provisions of ss. 71(2) and 72 of the Act made various disallowances, particularly, the claim of the assessee for setting off of the brought forward business losses of the asst. yrs. 1991-92 to 1993-94 against the capital gains during the current year, vide order dt. 27th March, 1997. The appellate authority i.e. Commissioner of Income-tax (Appeal){in short "the CIT(A)"}also did not agree to the submission made on behalf of the assessee in regard to not allowing the setting off of the assessed business loss for the asst. yrs. 1991-92 to 1993-94 against the capital gains during the current year, in the appeal carried by it. The appeal was consequently dismissed on 16th July, 1997. In further appeal at the instance of the assessee, the order of the CIT(A) was upheld by the Tribunal.
(3.) IN view of the aforesaid, the AO levied a penalty of Rs. 6,30,930 under S. 271(1)(c) of the Act on the assessee, vide order dt. 23rd March, 2004. The CIT(A) in appeal against that order drew support from a decision of this Court in CIT vs. Manish Iron Stores (2004) 186 CTR (P&H) 159 : (2003) 263 ITR 484 (P&H) and observed that since no satisfaction had been recorded by the AO either during the assessment proceedings or in the assessment order for initiating penalty proceedings under S. 271(1)(c) of the Act and, thus, ordered that the penalty imposed under that provision stood cancelled. The Tribunal, on appeal by the Revenue against the order of the CIT(A) in the matter of penalty, vide order dt. 25th Sept., 2009 remitted the case to the CIT(A) with a direction to decide the question of levy of penalty under S. 271(1) (c) of the Act on merits. Thereafter the CIT(A) dismissed the appeal of the assessee and confirmed the penalty. However, the assessee succeeded before the Tribunal and the appeal carried by it against the order of the CIT(A), dt. 29th Oct., 2009 was allowed vide order dt. 31st March, 2010.;