COMMISSIONER OF INCOME TAX Vs. U MANOHAR RAO

JUDGEMENT

(1.) The Revenue has preferred this appeal challenging the order dated 14.03.2005 passed in ITA No. 343/Bang/2003 by the Appellate Tribunal raising following substantial questions of law:

(2.) The respondent - assessee filed his return of income for the assessment year 1988-89 declaring a total income of Rs. 4,88,130/-. The said assessment was processed under Section 143 read with Section 147 of the Income Tax Act and was completed on 27.03.1997. The Assessing Officer, however initiated proceedings under Section 271(1)(a) of the Act and notices were issued requesting the assessee to show cause as to why the penalty under the said provision should not be levied for filing return of income belatedly. The respondent - assessee explained stating that he was not. in a position to pay the self assessment, of the tax on account of paucity of funds and therefore, the said explanation had to be taken into consideration and penalty proceedings be dropped. The Assessing Officer, however, did not. accept the explanation offered by the assessee and proceeded to levy penalty by its order dated 22.08.1997, which order was challenged by the assessee before the Commissioner of Income Tax (Appeals) and being unsuccessful, the assessee challenged the order of the appellate authority dated 26.12.2002 before the Appellate Tribunal, Bangalore Bench. The Tribunal while accepting the explanation offered by the assessee, set aside the order of penalty dated 22.08.1997. Being aggrieved by the said order, the Revenue has preferred this appeal.

(3.) We have heard learned Counsel for the department: and learned Counsel for the respondent - assessee.