CIT Vs. DEEP CHAND

JUDGEMENT

(1.) This appeal under section 260A of the Income-tax Act, 1961 (for short ''the Act''), has been filed by the Revenue against the order dated 2-3-2006, passed by the Income-tax Appellate Tribunal, New Delhi Bench ''SMC'', New Delhi (in short ''the Tribunal'') in I. T. A. No. 4892/Del/2005, relating to the assessment year 1993-94.

(2.) The appeal was admitted on 26-3-2007, for determination of the following substantial question of law :

(3.) The facts, in brief, necessary for adjudication as narrated in the appeal are that during the assessment year under consideration, the assessee had received a gift amounting to Rest. 1,75,000 on payment of an equal amount in cash, along with premium for arranging that gift. During proceedings under section 148 of the Act initiated against the assessee, the amount equal to the amount of the gift, i.e., Rest. 1,75,000 and Rest. 17,500 on account of premium at the rate of 10 per cent, were added to the income of the assessee. The Commissioner of Income-tax (Appeals) (in short ''the CIT(A)''), confirmed the order of the Assessing Officer whereas the Tribunal accepted the appeal of the assessee and deleted the penalty, vide order dated 22-9-2005. Meanwhile proceedings under section 271(1)(c) of the Act were also initiated against the assessee whereby a penalty of Rest. 82,000 was imposed on the assessee. The assessee preferred appeal against imposition of penalty. The Commissioner of Income-tax (Appeals) cancelled the penalty imposed, vide order dated 26-10-2005. The appeal carried by the Revenue was dismissed by the Tribunal vide order under appeal and it was observed that since the Assessing Officer had not recorded his satisfaction before initiating the penalty proceedings, the order of penalty could not be sustained.