Rakesh Garg, J. - (1.) THE revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the "Income Tax Act") against the order dated 20 -5 -2007 passed by the Income Tax Appellate Tribunal, Delhi Bench "SMC," Delhi (hereinafter called the Tribunal) in ITA No. 3475/Del/2006 for the assessment year 2003 -04, raising the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the learned Tribunal was justified in cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act by ignoring that the surrender of income of Rs. 2,67,155 forming basis of penalty was not voluntary in good faith but was only when cornered from all angles about the unexplained investment in purchase of Sarson?
(2.) WHETHER on the facts and in the circumstances of the case, the learned Tribunal was right in cancelling the penalty on erroneous factual findings? 2. A Flying Squad of Market Committee, Sirsa checked the stock of respondent assessee on 12 -3 -2003 and excess stock of Sarson was found, for which composition fee, fine and penalty were imposed. On the basis of this information, notice dt, 27 -8 -2004 under Section 142(1) of the Income Tax Act was issued to assessee. The return of income was filed on 16 -5 -2005 declaring an income of Rs. 39,190. The assessee was required to explain the source for which the excess stock detected by the Market Committee was made. Ultimately, the assessee came forward with the proposals for surrendering the value of excess stock subject to no penal action, which was not accepted by the assessing officer and addition of Rs. 2,67,155 on account of unexplained investment in excess stock of Sarson was made by him vide order dated 17 -6 -2005. Penalty proceedings under Section 271(1)(c) of the Income Tax Act were also initiated against the assessee. The Income Tax Officer, Ward -2, Fatehabad vide order dated 23 -3 -2006 imposed penalty to the tune of Rs. 84,155 under Section 271(1)(c) of Income Tax Act upon the assessee. Appeal filed by the assessee challenging order dated 23 -3 -2006 imposing penalty upon him, was dismissed by the Commissioner (Appeals), Rohtak, vide order dated 17 -8 -2006.
(3.) STILL dissatisfied with the order of Commissioner (Appeals), Rohtak, the assessee filed further appeal before the Tribunal, who vide its order dated 25 -5 -2007, accepted the appeal and set aside the order of the lower authorities and cancelled the penalty of Rs. 84,155, levied by the assessing officer under Section 271(1)(c) of the Income Tax Act.;