Penalty not leviable on issue on which a substantial question of law has been framed by HC

Admittedly the impugned addition pertaining to the amount received by the assessee from M/s. Newell Rubbermaid Inc. has been upheld by the Tribunal. At the same time we also observed that in assessee’s appeal ITA No. 1235/2011 order vide dated 29.11.2011 (supra) the Hon’ble High Court of Delhi has admitted appeal of the assesee and a substantial question of law has been framed therein. In view of various decisions of Hon’ble Jurisdictional High Court including decision in the case of Liquid Investment Ltd. (supra) we reach to a logical conclusion that when appeal of the assessee has been admitted in the Hon’ble High Court and substantial question of law has been framed then the issue becomes debatable and in this situation no penalty u/s 271(1)© of the Act is not leviable on the assessee.

Respectfully following the above decisions of Hon’ble Jurisdictional High Court of Delhi in the case of Liquid Investment Ltd. (supra) and other relevant decisions we are inclined to hold that the penalty was imposed on the assessee pertaining to the issue on which a substantial question of law has been framed by Hon’ble High Court and the same has become debatable then no penalty is leviable thereon.