COMMISSIONER OF INCOME TAX Vs. SHYAM RAJ SINGH

JUDGEMENT

(1.) This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, "the Act") against the order dated 31.8.2007, Annexure A.4 passed by the Income Tax Appellate Tribunal, Delhi Bench 'I' New Delhi in ITA No.4601/DEL/2005 for the assessment year 2001-02. It was admitted on 18.8.2008 to consider the following substantial questions of law:-

(2.) A few facts relevant for the decision of the controversy involved, as narrated in the appeal may be noticed. The assessee filed return on 31.10.2001 declaring income of Rs. 2,67,640/-. The assessment under section 143(3) of the Act was completed on 26.2.2004 at total income of Rs. 4,43,780/-. The assessee did not prefer any appeal before the Commissioner of Income Tax (Appeals) [the CIT(A)] against the assessment order. The Assessing Officer levied a penalty of Rs. 46,072/- under section 271(1)(c) of the Act on account of furnishing of inaccurate particulars of his income in respect of addition amounting to Rs. 1,31,262/- on account of cessation of liability as the assessee was not able to explain the difference of Rs. 1,31,262/- in the account of Bharat Petroleum Corporation Limited (BPCL). The CIT(A) vide order dated 13.10.2005, Annexure A.3 dismissed the appeal filed by the assessee holding that the amount of Rs. 1,31,262/- was not on account of cessation of liability but represented the difference in the figure recorded in the assessee's books of account. Aggrieved by the order, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 31.8.2007, Annexure A.4 partly allowed the appeal and cancelled the penalty levied by the Assessing officer on the ground that the Assessing officer had not recorded satisfaction in the assessment order. It was also observed by the Tribunal that CIT(A) had no power to change the basis of penalty and reinitiate penalty proceedings in the course of hearing of penalty appeal itself. Hence the present appeal.

(3.) We have heard learned counsel for the appellant and perused the record.