G.S. Kulkarni JUDGMENT
S.V. Gangapurwala, J.
1. Admit. Taken up for final hearing with the consent of the learned counsel for the parties.
2. The Revenue has assailed the judgment and order of the Tribunal thereby partly allowing the appeal filed by the Revenue against the judgment and order of the Commissioner (Appeals).
3. The Income Tax Return of the Respondent-Assessee was processed under Section 143(1) of the Income Tax Act (for sake of brevity hereinafter referred to as "the Act"), demand was raised for Rs. 1,64,90,573/- and penalty of Rs. 1,19,30,677/- was imposed by the Assessing Officer under Section 221(1) of the Income Tax Act for default by Assessee in the payment of demand. Aggrieved thereby the Assessee filed Appeal before the Commissioner of Income-Tax (Appeals)-17, Mumbai [for short "CIT(A)"]. The CIT(A) under its order dated 15/03/2010 deleted the penalty imposed by the Assessing Officer holding that interest component has to be excluded while levying penalty under Section 221(1) and since the penalty levied exceeded the tax component, it set-aside the order levying penalty. Aggrieved thereby the Department filed a appeal before the Income Tax Appellate Tribunal, Mumbai [for short "ITAT"]. The ITAT held that while levying penalty under Section 221(1) of the Act interest component is not to be considered and remitted the matter to the Assessing Officer with the direction to quantify the amount of penalty in accordance with provisions of Section 221(1) of the Act. The Department has assailed the said order in the present appeal.
4. The Department has framed following questions purportedly as substantial questions of law for consideration by this Court.
"1) Whether on facts and in the circumstances of the case and in law, the ITAT is justified in holding the penalty u/s. 221(1) is to be imposed in respect of only the tax excluding interest u/s. 234A, 234B & 234C without appreciating that section 221(1) does not contain any such condition that the penalty imposed under the said section should be a percentage of only the tax excluding the interest.
2) Whether on facts and in the circumstances of the case and in law, the ITAT is justified in deleting penalty imposed in respect of arrears of interest u/s. 234A, 234B & 234C without appreciating that Section 221(1), the Assessing Officer is empowered to impose any amount of penalty 'so, however that the total amount of penalty does not exceed the amount of tax in arrears and thus the term used in the said section is tax in arrears and not 'tax', as erroneously held by the Hon'ble Tribunal.
3) Whether on facts and in the circumstances of the case and in law, the ITAT is justified in deleting the penalty levied u/s. 221(1) in respect of arrears........