Commissioner of Income Tax vs Prakash Chandra Yadav

In this appeal u/s 260A of the Income Tax Act, 1961 (''Act''), the revenue is aggrieved by an order dated 5-11-2004 passed by the Income Tax Appellate Tribunal (Tribunal''), Delhi Bench ''E'' in ITA No. 4694/Delhi/2000 relevant for the assessment year 1997-98, relating to penalty proceedings.

The facts leading to the filing of this appeal are that in the block assessment proceedings, preceding the assessment year out of which the present appeal arises the assessee had claimed deduction for interest in the amount on loans taken for the purposes of purchasing house property. In the block assessment proceedings, the assessing officer had not accepted the contention of the assessee that it had taken a loan. For the assessment year 1997-98 with which we are concerned with the assessee claimed deduction in the sum of Rs. 10,99,650 towards interest on the loans taken. The assessing officer then asked the assessee why the claim of interest should not be disallowed to which the assessee apparently did not give any satisfactory answer. In view of this, the assessing officer disallowed the claim of interest and decided to initiate penalty proceedings against the assessee u/s 271(1)(c) of the Act.

By an order dated nil, the assessing officer levied a penalty of Rs. 4,12,860 on the assessee which was challenged by him before the Commissioner (Appeals) (''Commissioner (Appeals)''). The appeal was rejected by the Commissioner (Appeals) but the Tribunal accepted the second appeal filed by the assessee.

The Tribunal noted that merely because certain expenses have been disallowed on account of an addition in the block assessment, that could not be a valid reason for deeming that the assessee had concealed its income. In this particular case it transpires that the assessee had challenged the block assessment proceedings in appeal. Under the circumstances, the Tribunal came to the conclusion that the explanation of the assessee was bona fide and, therefore, there was no question of the assessing officer making an inference that the assessee had sought to conceal its income or furnish inaccurate particulars thereof by invoking the deeming provision. On merits, therefore, the Tribunal came to the conclusion that there was no reason for the assessing officer to initiate penalty proceedings against the assessee.

After hearing learned Counsel for the revenue, we do not find any error having been committed by the Tribunal. No doubt for the block assessment which pertains to a period prior to the assessment year that we are dealing with, the assessing officer had not accepted the contention of the assessee that it had taken a loan but that block assessment order was challenged by way of an appeal by the assessee. In the year, with which we are concerned, the assessee claimed the amount as a loan and this was consistent with its stand taken in the appeal in regard to the block assessment. It cannot be said that the explanation on appeal by the assessee was not bona fide. There was no reason for the assessing officer to conclude on these facts that the assessee had concealed its income or furnished inaccurate particulars. We do not find any merit in this appeal.

No substantial question of law arises.

Dismissed.