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Judgment
This appeal of the Revenue challenges the order passed by the Income Tax Appellate Tribunal deleting a penalty in the sum of Rs. 8,56,72,539/- imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961. Mr. Tejveer Singh submits that the Tribunal''s finding in paragraph 23 on this point raises a substantial question of law and, therefore, the appeal be admitted.
We are unable to agree with Mr. Tejveer Singh. In paragraph 23 of the order passed by the Tribunal and impugned in this appeal, it is held that there were two disallowances by the Assessing Officer viz. under section 40(a)(i) to the tune of Rs. 14.92 crores and second income of Head Office/Branch Office at Rs. 14.92 crores. In a composite order whereby these disallowances were made, the Assessing Officer directed initiation of proceedings under section 271(1)(c) of the Income Tax Act, 1961. Thereafter he proceeded to impose this penalty.
The Tribunal found in paragraph 23 that the Assessing Officer''s views and on the merits of the disallowances have not been accepted and the special Bench had to be constituted to resolve the legal issue. All this indicates that there were two views possible on the issue and before it was settled by a special Bench decision of the Tribunal. Thus, on a debatable point and legal issue, a penalty could not have been imposed and the ingredients of section 271(1)(c) of the Income Tax Act are not attracted in such cases. This is essentially a finding of fact and clearly emerging from the admitted position. In the circumstances, the Tribunal''s direction to delete the penalty does not raise any substantial question of law.
The appeal is devoid of merits and it is dismissed. There shall be no order as to costs.