Appeal granted, penalty under Income Tax Act deleted. High Court admits substantial question of law.

The Tribunal allowed the appeal, directing the AO to delete the penalty of Rs. 1,79,430 imposed under section 271(1)(c) of the Income Tax Act, 1961. This decision was based on the admission of a substantial question of law by the High Court, rendering the issue debatable and negating the grounds for the penalty.

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Issues:
Levy of penalty under section 271(1)(c) of the Income Tax Act, 1961.

Analysis:
The appeal in ITA No. 2970/Mum/2015 for A.Y. 2006-07 dealt with the imposition of penalty under section 271(1)(c) of the Income Tax Act, 1961. The primary issue was whether the ld. CIT(A) was justified in confirming the levy of penalty in the given circumstances. The assessee did not appear during the proceedings, and the notice sent was returned unserved. The ld. AO observed that the assessee received sale proceeds of shares resulting in long term capital gain, which was added as unexplained cash credit. The penalty proceedings were initiated for furnishing inaccurate particulars of income. Despite the assessee providing relevant documents to establish the genuineness of the share transactions, the ld. AO proceeded to levy a penalty of Rs. 1,79,430 under section 271(1)(c) of the Act.

The Tribunal noted that the quantum appeal was confirmed by the Tribunal, and the assessee had appealed to the Jurisdictional High Court, which admitted the appeal. The Tribunal emphasized that once a question of law is admitted by the High Court, the issue becomes debatable, and there cannot be an allegation of furnishing inaccurate particulars of income. The Tribunal referred to the decision of the Hon'ble Delhi High Court in a similar case to support this stance. As the substantial question of law raised by the assessee was admitted by the High Court, the Tribunal directed the ld. AO to delete the penalty amount in the instant case, as the issue in dispute had become debatable.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the ld. AO to delete the penalty of Rs. 1,79,430 imposed under section 271(1)(c) of the Income Tax Act, 1961. The decision was based on the admission of the substantial question of law by the Jurisdictional High Court, making the issue debatable and negating the grounds for the penalty.

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