Principal Commissioner Of Income Tax Vadodara 2 v. Oral Order

C/TAXAP/515/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 515 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX VADODARA 2VersusNATIONAL DAIRY DEVELOPMENT BOARD==========================================================Appearance:MR.VARUN K.PATEL(3802) for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHIandHONOURABLE MR.JUSTICE B.N. KARIA Date : 11/06/2018 ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1.Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 26.05.2017 raising following question for our consideration: “[a] Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in deleting the penalty under section 271(1)(c) of the Income Tax Act with respect to addition made on account of interest income on North Kerala Dairy Project Fund without appreciating that this is not a case of plausible claim based on a bonafide interpretation of law, and the interest income on North Kerala Dairy Fund Project was clearly taxable and the penalty was supported by the decision in Zoom Communiation (P) Ltd. (327 ITR 310)?” 2.As can be seen, the issue pertains to penalty imposed by the Assessing Officer under section 271(1) C/TAXAP/515/2018 ORDER (c) of the Income Tax Act, 1961 ('the Act' for short), which the Commissioner of Income Tax (Appeals) deleted and the Tribunal confirmed the decision of the Commissioner of Income Tax (Appeals). 3.Respondent-assessee National Dairy Development Board had received certain donations for application for specified purposes. The assessee parked the funds and earned the interest. The assessee neither could apply the interest for the noted purpose, nor returned the interest to the donor. In this background, the question of taxing the interest arose. We are informed the assessee had lost the issue upto the level of Tribunal but the assessee's appeal before the High Court is pending. In such background, the question of levying the penalty become relevant. The Assessing Officer was of the opinion that the assessee had made a claim which was not justified and thereby sought to evade taxes. Commissioner of Income Tax (Appeals) and the Tribunal held different opinion. In their view, the question of taxability would stand on an entirely different footing as compared to penalty. The Tribunal, in particular, noted that there is nothing to suggest C/TAXAP/515/2018 ORDER that the explanation of the assessee is incorrect. In that view of the matter, the penalty was deleted. 4.We see no error in the view of the Tribunal. When the Tribunal find that the explanation of the assessee was plausible not levying the penalty, would not require any interference. 5.No question of law arises. Tax Appeal is dismissed. (AKIL KURESHI, J) ANKIT SHAH (B.N. KARIA, J)