COMMISSIONER OF INCOME TAX v. TEK RAM (HUF)
[Citation -2008-LL-0204-1]

Citation 2008-LL-0204-1
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name TEK RAM (HUF)
Court HC
Relevant Act Income-tax
Date of Order 04/02/2008
Assessment Year 1998-99
Judgment View Judgment
Keyword Tags hindu undivided family • enhanced compensation • bona fide belief • debatable issue • receipt basis
Bot Summary: 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 the assessee is liable to pay penalty under section 271(1)(c) of the Income-tax Act, 1961, equal to 100 per cent. The appeal filed by the assessee against the order of the penalty proceedings was accepted by the Commissioner of Income-tax, Faridabad, vide his order dated November 25, 2005. The appeal filed by the Revenue before the Tribunal against the order of the Commissioner of Income-tax was also dismissed on April 19, 2007. Mr. Yogesh Putney, advocate, learned counsel for the Revenue/appellant, has vehemently argued that the enhanced compensation and interest on enhanced compensation are taxable on receipt basis and the same was not deliberately offered to tax by the assessee, though the same was taxable and had the return, was accepted as correct income, the Revenue would have suffered loss on account of tax and the explanation offered by the assessee in respect of the facts material to the computation of total income have been found to be false and the penalty under section 271(1)(c) has been rightly imposed. The said finding of fact has been given by the Tribunal after perusing the relevant material on record and the orders of the lower authorities and there is no such material to show that the assessee has filed inaccurate particulars in the return of income.


JUDGMENT judgment of court was delivered by Rakesh Kumar Garg J. Revenue has filed present appeal against order dated April 19, 2007, passed by Income-tax Appellate Tribunal, Delhi Bench H , New Delhi, in I. T. A. No. 328/Delhi of 2006 in case of respondent/assessee for assessment year 1998-99 raising following substantial questions of law: (i) Whether hon ble Income-tax Appellate Tribunal was right in law in deleting penalty levied under section 271(1)(c) of Income-tax Act, 1961, whereas it had already confirmed addition made under section 45(5) of Income-tax Act on account of enhanced compensation received during previous year relating to assessment year 1998-99? (ii) Whether, on facts and circumstances of case, hon ble Income-tax Appellate Tribunal was right in holding that view of assessee regarding non-taxability of enhanced compensation was bona fide particularly in view of provisions of section 45(5) of Income-tax Act? brief facts giving rise to this appeal are as under: (i) respondent-assessee filed return declaring income of Rs. 30,760 on March 30, 1999, in status of individual. assessee though mentioned enhanced compensation received at Rs. 7,68,172.75 and interest on enhanced compensation at Rs. 4,351 in computation sheet but did not offer same for tax. assessment was completed under section 143(3) of Income-tax Act in status of Hindu undivided family by Income-tax Officer, Ward-8, Faridabad, vide order dated January 31, 2001, at income of Rs. 3,19,767. This order was later on set aside by Commissioner of Income-tax (Appeals) vide consolidated order for assessment years 1996-97, 1997-98 and 1998- 99 dated April 20, 2001. Thereafter, assessment was framed again vide assessment order dated January 21, 2003, and it was held that enhanced compensation and interest on enhanced compensation is taxable. Vide his order penalty proceedings under section 271(1)(c) were also to be initiated separately. Income-tax Officer, Ward-1(3), Faridabad, vide his order dated March 29, 2005, held that he is satisfied that assessee has concealed particulars of his income amounting to Rs. 10,57,180 for assessment year 1998-99 and, therefore, assessee is liable to pay penalty under section 271(1)(c) of Income-tax Act, 1961, equal to 100 per cent. of tax sought to be evaded. appeal filed by assessee against order of penalty proceedings was accepted by Commissioner of Income-tax (Appeals), Faridabad, vide his order dated November 25, 2005. While allowing appeal, Commissioner of Income-tax (Appeals) held that taxability of enhanced compensation and interest thereon is matter of litigation and issue has not been finally settled and therefore, there was bona fide belief on part of appellant that this income could not be subjected to tax and under these circumstances, no penalty under section 271(1)(c) could be imposed. appeal filed by Revenue before Tribunal against order of Commissioner of Income-tax (Appeals) was also dismissed on April 19, 2007. Mr. Yogesh Putney, advocate, learned counsel for Revenue/appellant, has vehemently argued that enhanced compensation and interest on enhanced compensation are taxable on receipt basis and same was not deliberately offered to tax by assessee, though same was taxable and had return, was accepted as correct income, Revenue would have suffered loss on account of tax and, therefore, explanation offered by assessee in respect of facts material to computation of total income have been found to be false and, therefore, penalty under section 271(1)(c) has been rightly imposed. Learned counsel for Revenue has been heard and record perused. We find that arguments raised by counsel for Revenue are without any merit and no substantial question of law arises from order of Tribunal. Tribunal has given finding of fact to effect that amount of enhanced compensation and interest on such enhanced compensation received by assessee were taxable in hands of assessee for year under consideration on receipt basis when matter relating to enhanced compensation was still in dispute was highly debatable issue inasmuch as two views were clearly possible on said issue as is apparent from decisions of various High Courts as well as of hon ble Supreme Court of India and claim of assessee was on this issue thus was based on one possible view and although said claim was not accepted in quantum proceedings on difference of opinion, we are of view that making of such claim bona fide on basis of possible view could not be treated as concealment of its income by assessee or furnishing of inaccurate particulars of such income so as to attract penal provisions of section 271(1)(c) of Income-tax Act. said finding of fact has been given by Tribunal after perusing relevant material on record and orders of lower authorities and there is no such material to show that assessee has filed inaccurate particulars in return of income. Thus, no question of law arises in present appeal and same is dismissed. *** COMMISSIONER OF INCOME TAX v. TEK RAM (HUF)
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