Commissioner of Income Tax vs Gaje Singh

Delay condoned. The revenue has preferred this appeal u/s 260-A of the Income Tax Act, 1961 (for short, "the Act") against the order dated 8-6-2007 passed by the Income Tax Appellate Tribunal, Delhi Bench ''I'', New Delhi in I.T.A. No. 4727/DEL/2005 for the assessment year 1997-98, proposing to raise following substantial questions of law:-

(i) Whether on the facts and circumstances of the case, the Hon''ble ITAT was right in holding that the view of assessee regarding non taxability of interest on enhanced compensation was bonafide?

(ii) That the Hon''ble ITAT erred in deciding that proving contumacious intent is an essential ingredient in levy of penalty in contravention of the provision of a Civil Statue like Income Tax Act in spite of there begin so many judgments that breach of a Civil obligation attracts levy of penalty whether the contravention was made by the defaulter with any guilty intention or not?

(iii) That the order of the Hon''ble ITAT is in contravention of the many judicial pronouncements including Thirupathy Kumar Khemka v. CIT 210 CTR 287 (Mad)?

The assessee received compensation in lieu of acquisition of his land and filed return in respect of income from long term capital gains for the assessment year 1998-99. No return had been field by the assessment year 1994-95 to 1997-98, for which notice u/s 148 of the Act was issued t the assessee and assessment was made in respect of interest on enhanced compensation. After completing assessment, the Assessing Office also levied penalty u/s 241(1)(c) of the Act on the ground that prior to assessment year 1998-99, the assessee did not disclose the interest income. The Commissioner (Appeals) set aside the penalty. It was held that the assessee had not concealed any particulars of his income. He could be having bonafide belief that interest was no taxable in the year of receipts but only after the issue was settled by higher Court. This view has been affirmed by the Tribunal by the Tribunal following its earlier judgment in the case of one Tek Ram.

It is not disputed that appeal of the revenue against the order of the Tribunal in the case of Tek Ram titled as CIT v. Shri Tek Ram [I.T.A. No. 579 of 2007] was dismissed by this Court on 4-2-2008.

Only contention raised now is that there was deliberate attempt at evasion by the assessee.

We do not find any merit in the contention raised. Valid reasons have been given by the Commissioner (Appeals) as well as the Tribunal for taking the view that the assessee could be under bonafide impression that liability to pay tax accrued only after the issue was finalized by the higher Court and not prior to that.

In view of above, no substantial question of law arises. The appeal is dismissed.