1. This appeal by the Revenue under section 260A of the Income-tax Act, 1961, raises the following substantial question of law:

Whether, in the facts and the circumstances of the case and in law, the Income-tax Appellate Tribunal was correct in deleting the levy of penalty on account of addition of Rs. 1,05,50,000 under section 40(a)(ia) in the light of the decision of the Tribunal in the case of Bansal Parivahan (India) P. Ltd. v. ITO : [2011] 9 ITR 565 (Mumbai): [2011] 43 SOT 619 (Mumbai)

The assessment year in question is 2006-07. The Assessing Officer passed an order of assessment on December 8, 2008, for the assessment year 2006-07. In the course of the assessment order, the Assessing Officer added back an amount of Rs. 1,05,50,000 to the income of the assessee on the ground that though the assessee had deducted tax in the amount of Rs. 2,11,000 that had not been deposited by the due date. The Assessing Officer noted that the amount had actually been deposited on June 30, 2006, and on July 7, 2006. The Assessing Officer relied on the provisions of section 40(a)(ia) in holding that inasmuch as the assessee had failed to deposit the tax deducted at source on or before the due date, a disallowance had to be effected by virtue of the provisions of section 40(a)(ia). Penalty proceedings were initiated under section 271(1)(c) and the Assessing Officer by his order dated June 29, 2009, imposed a penalty of Rs. 51,41,400. In appeal, the Commissioner of Income-tax (Appeals) deleted the penalty with the following observations:

So far as the penalty in respect of disallowance under section 40(a)(ia) is concerned, the appellant is correct in saying that the claim of expense made is correct and by virtue of the deeming provisions under section 40(a)(ia) only, allowability of the claim shifts in time. In other words, tax sought to be evaded works out to be nil. The fact of the matter is that the appellant never made the claim in respect of this expense in the computation of income for the assessment year 2007-08 until the claim was disallowed in the assessment for the assessment year 2006-07. The date of assessment order under section 143(3) for the assessment year 2006-07 is December 8, 2008, whereas the appellant has claimed this expense by filing the revised return for the assessment year 2007-08 on February 25, 2009. This clearly shows that the appellant did not claim the expense in the two years. It was claimed in the assessment year 2006-07 and only after the same was not allowed as per the provisions of section 40(a)(ia), the claim of expense was made in the subsequent year through filing of revised return. This clearly establishes that the appellant has no intention of evading the tax by making the wrongful claim of expenditure. Concealment penalty in respect of this income can, therefore, not be sustained.

2. When the matter was carried in appeal to the Tribunal, the Departmental representative submitted that the order of the Commissioner of Income-tax (Appeals) in deleting the penalty on account of a disallowance of Rs. 1.05 crores may be correct in view of the decision of the Tribunal in the case of Bansal Parivahan (India) P. Ltd. v. ITO : [2011] 9 ITR 565. The Tribunal accordingly sustained the deletion of the penalty levied on the ground that it was covered by its own decision in the case of Bansal Parivahan (supra). The Tribunal observed that in that decision it had been held that where the assessee had paid the amount before the due date of the filing of the return of income under section 139(1), no disallowance can be made in view of the amendment made by the Finance Act of 2010 to the provisions of section 40(a)(ia).

3. Counsel appearing on behalf of the Revenue submitted that subsequent to the decision of the Tribunal in Bansal Parivahan and as a matter of fact after the impugned decision which was rendered on March 30, 2011, a Special Bench of the Tribunal held in Bharati Shipyard Ltd. v. Deputy CIT (I.T.A. No. 2404/Mum/2009, decided on September 9, 2011)--since reported in : [2011] 11 ITR 599 (Mumbai) [8B] that the amendment which was brought about by the Finance Act, 2010, to section 40(a)(ia) was not remedial and curative in nature and would, therefore, not have retrospective effect. In view of this decision, the learned counsel submitted that the impugned order of the Tribunal cannot be sustained.

4. On the other hand, it was urged on behalf of the assessee that--

(i) the entire issue pertaining to whether the amendment which is brought about by the Finance Act of 2010 is remedial or otherwise is debatable and, hence, a Special Bench of the Tribunal had to be constituted to resolve the issue in Bharati Shipyard. Hence, it was urged that the issue being debatable, no penalty under section 271(1)(c) ought to be levied;

(ii) section 40(a)(ia) brings about a deeming fiction. The effect of the fiction is a matter of timing. As the order passed by the Commissioner of Income-tax (Appeals) would show the date of the assessment order in the present case is December 8, 2008. The assessee filed a revised return only on February 25, 2009, for the assessment year 2007-08 claiming this payment as an expense. In other words, though the assessee had made a claim in the assessment year 2006-07, it was only after the claim was not allowed by virtue of the provisions of section 40(a)(ia) that a claim of expense was made in the subsequent year by filing a revised return and which claim came to be allowed. Hence, there can be no allegation of concealment on the part of the assessee;

(iii) the assessee had paid interest under section 234B in the amount of Rs. 11 lakhs and this is one more substance which can be placed in balance in determining whether a penalty under section 271(1)(c) should be imposed.

5. The Tribunal, in the course of its decision noted several submissions which were urged on behalf of the assessee in support of the case that a penalty should not be imposed under section 271(1)(c). These submissions, some of which have already been adverted to in the earlier part of this order have been exhaustively catalogued in paragraph 4 of the impugned decision. The Tribunal in the course of its decision took the view that the issue was covered by the decision in Bansal Parivahan and sustained the deletion of the penalty only on that ground. As we have noted earlier, the submission which has been urged on behalf of the assessee in this case is that since the appeal arises not out of the quantum proceedings, but on the issue of penalty, the correctness of the view in Bansal Parivahan would not be determinative, strictly speaking of the issue as to whether a penalty should be imposed under section 271(1)(c). The Tribunal subsequent to its decision in Bansal Parivahan has reconsidered the amendment which was brought about to section 40(a)(ia) by the Finance Act of 2010 with effect from April 1, 2010. In Bharati Shipyard, the Special Bench of the Tribunal has held that the amendment was not retrospective. As a result of the fact that the Tribunal relied entirely on the earlier decision in Bansal Parivahan, the other submissions which were urged on behalf of the assessee were not considered at all. In that view of the matter, we are of the view that particularly in the light of this position, it would be appropriate and proper to remit the proceedings back to the Tribunal for reconsideration. We have recorded the submissions which have been urged on behalf of the assessee in support of the submission that quite apart from the correctness of the view which was taken in Bansal Parivahan, no penalty ought to have been imposed in the facts of the present case under section 271(1)(c) in view of the circumstances which weighed with the Commissioner of Income-tax (Appeals) and the additional factors which have been adverted to in the earlier part of this judgment. It would be open to the assessee to urge all these submissions before the Tribunal. Since those submissions have not been considered, we deem it appropriate and proper, to quash and set aside the impugned judgment and to restore the proceedings back to the file of the Tribunal for fresh consideration. In the view which we have taken, it is not necessary for the court to express a conclusive opinion one way or the other on the question of law raised. The appeal is accordingly disposed of. There shall be no order as to costs.