Rakesh Garg, J. - (1.) THE Revenue has filed the present appeal under Section 260A of the IT Act, 1961 (for short 'the Act') against the order of the Income Tax Appellate Tribunal, Chandigarh Bench 'B' Chandigarh (for short the "Tribunal") passed in ITA No. 983/Chd/2005 dt. 28th Feb., 2007 for the asst. yr. 2001 -02 raising the following substantial question of law: Whether on the facts and circumstances of the case, the Hon'ble Tribunal was right in law in confirming the order of CIT(A) in deleting the penalty levied under Section 271(1)(c) at Rs. 4,25,720?
(2.) THE respondent is drawing income from salary, business income, house property and income from other sources. The return in this case was filed on 22nd Oct., 2001 declaring income of Rs. 4,35,110. The return was processed under Section 143(1) of the Act. The assessment was framed by the AO on 29th March, 2004 at an income of Rs. 16,47,990 after making addition of Rs. 12,12,880 on account of uncorroborated freight charges. The AO noticed that respondent had furnished inaccurate particulars of his income and had also concealed the particulars of income as the assessee had surrendered an amount of Rs. 12,12,880, after inquiries were Initiated to check the genuineness of the expenses claimed in the return. While making the assessment, the AO rejected the request of the surrender made by the respondent and initiated penalty proceedings on this account. Penalty under Section 271(1)(c) was imposed at Rs. 4,25,720 vide order dt. 23rd Sept., 2004. Feeling aggrieved against the aforesaid penalty order, the respondent preferred an appeal before the CIT(A) -II, Ludhiana, who vide his order dt. 14th July, 2005 deleted the penalty while allowing the appeal of the assessee. Not being satisfied with the order of the CIT(A) -II, the Revenue preferred an appeal before the Tribunal. The Tribunal vide its order dt. 28th Feb., 2007 upheld the order of the CIT(A) -II and resultantly dismissed the appeal of the Revenue. Hence this appeal by the Revenue.
(3.) SHRI Sanjeev Bansal, advocate, learned Counsel for the Revenue has vehemently argued that the assessee could not prove genuineness of the transportation expenses debited to P&L a/c as undisputedly, the transporters to whom the payment of freight charges was made could not be traced and therefore, the expenses on account of freight charges made to these transporters could not be confirmed. It was further argued by the learned Counsel for the Revenue that the surrender made by the assessee was never mutually agreed upon, as the same was rejected by the AO, as the said surrender had been made only after investigation was carried out by the Department and it was not bonajide and voluntary disclosure as the revised return was made only when the assessee came to know that there was detection of concealment by the Department. Thus the penalty was rightly imposed by the AO and therefore, the order of the Tribunal is liable to be quashed.;