Rakesh Garg, J. - (1.) THE Revenue has filed the present appeal against the order dated April 19, 2007, passed by the Income Tax Appellate Tribunal, Delhi Bench "H", New Delhi, in I.T.A. No. 328/Delhi of 2006 in the case of the respondent/assessee for the assessment year 1998 -99 raising the following substantial questions of law: (i) Whether the hon'ble Income Tax Appellate Tribunal was right in law in deleting the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961, whereas it had already confirmed the addition made under Section 45(5) of the Income Tax Act on account of enhanced compensation received during the previous year relating to the assessment year 1998 -99? (ii) Whether, on the facts and circumstances of the case, the hon'ble Income Tax Appellate Tribunal was right in holding that the view of the assessee regarding non -taxability of enhanced compensation was bona fide particularly in view of the provisions of Section 45(5) of the Income Tax Act?
(2.) THE brief facts giving rise to this appeal are as under: (i) The respondent -assessee filed a return declaring income of Rs. 30,760 on March 30, 1999, in the status of individual. The assessee though mentioned enhanced compensation received at Rs. 7,68,172.75 and interest on enhanced compensation at Rs. 4,351 in the computation sheet but did not offer the same for tax. The assessment was completed under Section 143(3) of the Income Tax Act in the status of a Hindu undivided family by the Income Tax Officer, Ward -8, Faridabad, vide order dated January 31, 2001, at an income of Rs. 3,19,767. This order was later on set aside by the Commissioner of Income Tax (Appeals) vide consolidated order for the assessment years 1996 -97, 1997 -98 and 1998 -99 dated April 20, 2001. Thereafter, the assessment was framed again vide assessment order dated January 21, 2003, and it was held that enhanced compensation and interest on the enhanced compensation is taxable. Vide his order penalty proceedings under Section 271(1)(c) were also to be initiated separately. The Income Tax Officer, Ward -1(3), Faridabad, vide his order dated March 29, 2005, held that he is satisfied that the assessee has concealed the particulars of his income amounting to Rs. 10,57,180 for the assessment year 1998 -99 and, therefore, the assessee is liable to pay penalty under Section 271(1)(c) of the Income Tax Act, 1961, equal to 100 per cent. of tax sought to be evaded.
(3.) THE appeal filed by the assessee against the order of the penalty proceedings was accepted by the Commissioner of Income Tax (Appeals), Faridabad, vide his order dated November 25, 2005. While allowing the appeal, the Commissioner of Income Tax (Appeals) held that the taxability of the enhanced compensation and interest thereon is the matter of litigation and the issue has not been finally settled and therefore, there was a bona fide belief on the part of the appellant that this income could not be subjected to tax and under these circumstances, no penalty under Section 271(1)(c) could be imposed. The appeal filed by the Revenue before the Tribunal against the order of the Commissioner of Income Tax (Appeals) was also dismissed on April 19, 2007.;